Three-year annualized return: 28.1%
Annual expense ratio: 0.35%
Minimum initial investment: $3,000
Biggest holdings: Actavis, Merck, Bristol-Myers Squibb, UnitedHealth Group, AstraZeneca
Vanguard Health Care (VGHCX) is the Grand Pooh-Bah of health care sector funds. Not only is it the biggest, it also charges the least of any health care mutual fund (exchange-traded funds tend to cost less). What’s more, even as Vanguard Health outpaced 60% of its peers over the past decade, it managed to do so with less volatility than any other health fund.
Manager Jean Hynes focuses on medical innovators and firms that will benefit from the changing U.S. health care system. Companies at the forefront of cancer treatments, including AstraZeneca, Bristol-Myers Squibb, Incyte, Merck and Roche, have helped the fund’s returns in recent years. Hynes, who works for Wellington Management, in Boston, also believes the new health care system will boost managed-care organizations, such as UnitedHealth and Aetna, and drugstore chains, such as CVS and Walgreens, which will benefit from higher sales as more Americans sign up for health insurance.
Hynes has been a manager of the fund since 2008, but she has been its sole manager only since 2013. That’s when co-manager Ed Owens, who had been with the fund since it launched in 1984, retired. In her first (nearly) two years at the helm, Hynes has posted a cumulative 78% return, 18 percentage points ahead of the fund’s benchmark, the MSCI ACWI/Health Care index.
Vanguard Health Care