JFNAX Or FSPHX: Which Healthcare Fund Should You Buy?

Mutual fund investors seeking striking returns on their investments could consider investing in the healthcare space. Mutual funds are an ideal way to invest in a diversified pool of assets, which offers investors an option to protect their money from inflation, market risks and high transaction costs.

A major reason to invest in the healthcare sector right now is the urgent need for medical products and services as the coronavirus pandemic continues to spread. With more than 3100 dead and at least 90,000 infected with the disease until now, demand for healthcare products and services could only surge from here.

Particularly, the healthcare sector reaped in decent profits since 2015. The Health Care Select Sector SPDR Fund (XLV) has gained 33% in the past five years. In fact, this sector ranks fifth in terms of witnessing maximum growth among the broader S&P 500 sectors in that time frame.

Thus, investing in mutual funds from the healthcare sector is a prudent move at present. Let us compare two top-ranked funds from this space, each sporting a Zacks Mutual Fund Rank #1 (Strong Buy), and find out which is the best fund for investment purposes.

Janus Henderson Global Life Sciences Fund Class A (JFNAX)

The fund aims for long-term capital growth. JFNAX invests the majority of its assets in securities of life sciences companies. The fund has a policy to invest at least 25% of its assets in securities of companies that are part of the life sciences sector.

This Sector-Healthproduct has a history of positive total returns for over 10 years. Specifically, JFNAX has rallied 15% over a year. The fund’s returns are 15.4% of the 3-year and 7.7% of the 5-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The Janus Henderson Global Life Sciences Fund Class A, as of the last filing, allocates its assets to top two major groups, namely Small Growth and Intermediate Bond. Further, as of the last filing, Merck & Co Inc, Novartis AG ADR and Abbott Laboratories (NYSE:ABT) were the top holdings for JFNAX.

JFNAX was incepted on Jul 06, 2009. It carries an expense ratio of 1.00%. The fund requires a minimal initial investment of $2500.

Fidelity Select Health Care Portfolio (FSPHX)

FSPHX aims for capital appreciation. The fund invests the majority of its assets in securities of companies that mostly manufacture or market products or services used in the health care sector. FSPHX is a non-diversified fund.

This Sector-Healthproduct has a history of positive total returns for over 10 years. Specifically, FSPHX has rallied 17.9% over a year. The fund’s returns are 17.9% of the 3-year and 10% of the 5-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The Fidelity Select Health Care Portfolio, as of the last filing, allocates its assets to top two major groups, such as Small Growth and High Yield Bond. Further, as of the last filing, UnitedHealth Group Inc (NYSE:UNH), Boston Scientific Corp (NYSE:BSX) and Roche Holding (SIX:ROG) AG Dividend Right Cert. were the top holdings for FSPHX.

FSPHX was incepted on Jul 14, 1981. It carries an expense ratio of 0.71%. The fund requires no minimal initial investment.

Conclusion

Taking a closer look at JFNAX and FSPHX, we find that the latter proves to be a better option. Although both funds sport a Zacks Mutual Rank #1, FSPHX provided investors with better returns over the one-, three- and five-year periods compared to JFNAX. FSPHX carries a lower expense ratio as well.

Although FSPHX has higher risk associated with it (three-year beta of 1.01 compared with JFNAX’s 0.95), it offers much higher returns to mutual fund investors.

To conclude, one may consider the returns provided by these two funds in the last reported quarter. FSPHX returned 22.2% while JFNAX returned 18.8% in fourth-quarter 2019.

Therefore, investors who have an appetite for higher risks may opt for FSPHX. After all, it offers much higher returns as compared to JFNAX. Although the prevalent market conditions aren’t exactly encouraging at present, mutual funds are long-term investments and therefore, one would do well to bet on the fund.

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