Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Investing in Health Care. Opinions?

edited March 2017 in Fund Discussions
I've noticed that this sector hasn't been discussed on this board for several months due to Hillary's 2015 tweet and continued possible government intervention in this sector. I've also noticed that Health Care funds have received "a shot in the arm" recently i.e. their performance has been good. Notably Fido Select Health Care (FSPHX), Fido Biotech (FBIOX) and Price Health Sciences (PRHSX). I'm considering buying a health care fund and would like to hold it for as long as possible, which does depend a great deal on government action or inaction regarding this sector.

1. What do people think of this sector for the next year and further into the future?
2. Opinions on FSPHX, FBIOX and PRHSX? FBIOX scares me however due to its volatility.
3. Is PRHSX open to new investors? M* indicates that it's open, but I thought it was closed.
4. Wait until Trump's fixation with changing/repealing Obamacare has settled?
5. Any other suggestions & comments would be most welcome.

Thanks in advance for any and all comments!

Comments

  • @ PopTart: I held PRHSX close to ten year, but made a mistake last fall and sold it. As soon as I get some additional cash in my brokerage account, I intend to re-take a position. Here are some health care to consider from U.S. News & World Report.
    Regards,
    Ted
    http://money.usnews.com/funds/mutual-funds/rankings/health
  • @ Ted - Thanks for the link.
  • I can't wait to read more responses to your questions; I own FSPHX and FBIOX in addition to VGHCX (which is not on your list; you may want to add that to your list to complete your research).

    PRHSX was closed when I was reshuffling my portfolio, but now open to investors; but I am good with the trio of VGHCX, FSPHX and FBIOX. FBIOX is most volatile of the lot, so if there is any need to sell, it will be the first to go.....and VGHCX will be the last to go. Also, rounding this group is POAGX (which has ~30% in Healthcare but currently closed).

    ACA repeal will be only for short-term reaction to the sector. On the flip side, the President has also vowed to revamp FDA so drugs can come to market faster. A lot of "issues" in this sector (regardless of regulation, innovation and pricing are big factors for the sector).

    Some of the regulations only transfer "power" between the sub-sectors (sub-sectors: traditional Pharma, Biotech, Payers (Managed Care companies), Distributors, etc). For example, ACA and pricing "gave" the Payers more leverage recently. On that note, I think PRHSX may be the most diversified of the lot, VGHCX and FSPHX are broadly diversified and FBIOX is the most concentrated. .

    I have had VGHCX and FSPHX for a long time (not selling them), and I bought FBIOX early last year when it was down big (I may sell soon). All of them are still lower compared to their 2015 highs.

    But I will wait for the "correction" to buy. Look forward to other comments.
  • @bumine - Thanks for your post, alot of very welcome info. for me to digest!
  • Hi PopTart!
    I own PSPHX. It's a good broad sector fund. It's a fund I will own for a long time. I added to it last year only to see it sink lower each time. As far as FBIOX, you will either be smiling or crying with this puppy, so I say use mad money for this fund. PFHAX did ok at the time everything was going up, so how could you lose? But I like PSPHX better. Also you could look up JAGLX....it also was a very good fund. They changed managers so I'm not sure how they're doing. As for the future, I can only say government and baby boomers---my view. They're the drivers. I also saw a piece on CNBC yesterday that basically said, with the high deductible and co-pays, nobody's in a hurry to change things 'cause you're paying the bill. Just saying......
    Right now, I'm waiting for something out of D.C. before I buy more healthcare.
    God bless
    The Pudd
  • @ Puddnhead - Thanks! I can't find a fund with the ticker of PSPHX, did you mean FSPHX? I agree that FBIOX is too concentrated for my tolerance. More food for thought, thanks!
  • Hi PopTart!
    You are so right. I need to stop longnecking and start proofreading more. With FBIOX you are also right. I can't take the pain so now I stay away. FSPHX is also at a 52-week high right now.....just saying.....I guess most things are. I'm going to ramble now about something said long ago by a human resources person that I went to school with. He said the company would give you a set amount of $$ and you put it into what you want or what matters the most to you. Like healthcare.....a good plan or eye care or dental or life insurance or the 401......whatever you wanted most. It never happened but what a novel idea. You could build your own benefit plan to your needs.
    God bless
    the Pudd
  • PopTart said:

    I've noticed that this sector hasn't been discussed on this board for several months due to Hillary's 2015 tweet and continued possible government intervention in this sector. I've also noticed that Health Care funds have received "a shot in the arm" recently i.e. their performance has been good.

    That's interesting.

    Just curious...why do you think that HC funds dipped last year, and then rebounded just recently?
  • I bought VHT a few months ago after the election. It has proven to be a very good pick thus far.
  • I think PRHSX, VGHCX and FSPHX are all good diversified healthcare options. Which one does best in the future is anyone's best guess so I would choose based on what's available to you NTF or whatever you have a prefer for one reason or another. I chose PRHSX because it was NTF for me and even though the manager has been a bit of a revolving door they've seemed to do a good job with replacements so far.

    I also own HQL, which is a Life Sciences closed-end fund, because they have private equity investments. Tekla has 4 closed-end funds with slight differences, such as a bigger focus on income, broad healthcare, life sciences and global, that have been discussed here occasionally if not recently so you could search for those discussions if you're interested. If you're just looking for general healthcare exposure I'd probably stick with one of the 3 mutual funds but if your interests are more specific then one of Tekla's offerings might be interesting.

    Finally, I have a small position in SBIO, which is a small cap offering of biotech companies that have drugs in Phase 2 or 3 clinical trials and have enough cash to last them for 24 months. This is just as volatile as FBIOX and often more volatile so you either have to be a big believer, like loving roller coasters, or you have to trade the volatility in order to tolerate the craziness.
  • @ willmatt72 - Thanks for letting me know about VHT, I'll take a look at it!

    @ PRESSmUP - Looking at the chart for FSPHX, this fund tanked in the latter quarter of 2015 after Hillary's tweet. Looks like this fund churned for much of 2016, with a rise and fall during 2016. 2017 seems to have seen a rebound, at least thus far.

    I went back 10 pages of MFO (early Jan) and couldn't find a thread about health care funds, thus a lack of interest in what seems to have been a beaten down sector. This year FSPHX (and other health care funds) are seeing an uptick, yet still below their 2015 highs. This is what sparked my interest in this sector.
  • @LLJB - Thanks for your suggestions. I agree that PRHSX, VGHCX and/or FSPHX would be what I'm looking for. I have a brokerage account with both Fido and Price, so either of their two funds will be my likely choice. SBIO seems too volatile and concentrated for me, much like FBIOX. These two options can soar much more than diversified options, but I have an aversion to Maalox and Tums. Thanks nonethless!
  • Healthcare has been a big winner for investors over almost any long-term period. I happen to access it through HQL, the small-cap growth fund BCSIX, and a smattering of individual stocks (like CELG). HQH is Tekla's broad-based health fund and a good one. If I were not in CEFs in this sector, I would own the Price or Vanguard fund, but I wouldn't trade it or try to time my entry point. For me, it's a hold-forever sector, so to the extent possible, I try not to let short-term political winds blow me off course.
  • @BenWP - Many thanks for your extremely helpful and knowledgeable post!
  • edited March 2017
    I don't make one year predictions, but I am bullish long term on the sector
  • @ MFO Members: BenWP made an excellent point when he said, "For me, it's a hold-forever sector, so to the extent possible, I try not to let short-term political winds blow me off course." To prove the point about long-term, VGHCX has had an annual return since it's inception in 1984 of 16.63%, while PRHSX since 1995 has returned 14.55%
    Regards,
    Red
  • @00BY @Ted - Thanks for your comments. I'm going to make one of the 3 health care funds (Fido, Price or Vanguard) a core holding in my portfolio. As mentioned, this sector has an excellent long term history even if politics muddles the short term outlook. Many thanks to all for your comments!
  • edited March 2017
    Hi @PopTart
    Hoping all is well at the A-squared household. Sure you're teaching the children well...as in, an equity is, a bond is......the markets fluctuate, but.........
    Okay, I'll provide a few "are you sh*t'in me data points for broad healthcare.

    >>>FSPHX and PRHSX from 1-4-99 thru 1-4-2008 (9 months before the full equity market melt)
    ---FSPHX return = 61% annualized with all distributions = 7.6%
    ---PRHSX return =161% annualized with all distributions = 20%

    NOTE: from the end of December, 2007 thru March of 2008 healthcare had a hit of about -20% and then moved sideways until the full market melt in mid-Sept. of 2008

    http://stockcharts.com/freecharts/perf.php?FSPHX,PRHSX&l=0&r=2262&O=111000

    >>>FSPHX and PRHSX, 1-4-2008 thru 3-4-2009 (market melt equity bottom, eh?)
    Both down about 40% during this time period. Healthcare was already moving to the downside long before the Sept. 2008 blowup.

    >>>FSPHX and PRHSX from 3-9-2009 (end of equity market melt) thru 3-3-2017 (now)
    ---FSPHX return = +431% annualized with all distributions = 54%
    ---PRHSX return = +508% annualized with all distributions = 63.5%

    http://stockcharts.com/freecharts/perf.php?FSPHX,PRHSX&n=2010&O=111000

    >>>Last five years via M*, including the Ms. Clinton comments about taking healthcare/pharma "down". Click onto the 5 year to sort return list. Five year health category average = 17.6%

    http://news.morningstar.com/fund-category-returns/health/$FOCA$SH.aspx

    As to the future directions....well, forces are pushing from many directions and there will likely be the continued swings in this equity sector. As to the challenges for the political faces portion, is part of this "lobby" link. One might presume that the big monies will continue to "talk", eh?

    https://www.opensecrets.org/lobby/top.php?indexType=i

    Now on the personal and sometimes scary side for this house, is at this time 67% of all invested assets are in equity with 80% U.S. and the other 20% mostly in Europe. Direct healthcare invests are FSPHX, PRHSX (before closed to us) and FHLC (Fido etf). With the other mutual funds, etf's or index funds; a M* snapshot indicates that 41% of our equity is in U.S./global healthcare. The majority of the monies being in the direct investments. These holdings placed a damper on our 2016 returns, but has us at 6%k YTD, thanks to the recovery in this sector. Keeping the faith at this time for this sector. Active traders are having even more fun; but this house doesn't play in the short time areas very much anymore; but attempt to watch for signs of sector "sickness".

    Lastly @PopTart , I do believe PRHSX is available to those within some retirement plans or direct investors with the company, but as you know, not via Fido. Also, the better of these two mutual funds was PRHSX. Within the past several years, even prior to the manager change at PRHSX, FSPHX was traveling a very similar path for returns. Your having direct access to FSPHX should more than cover this area. You may also choose to review some of Fido's other health/medical related select funds. And keep in mind that you likely already have a decent amount of healthcare inside of broad based mutual funds or indexes.

    I've tried my best to recall and submit everything I thought about earlier today to reference your post. I'm going to take another check of links and data to help eliminate any mistakes. Questions?

    Take care,
    Catch

  • @catch22 - Thanks for posting so much info! In addition to my Fido account I've opened a Price account, which shows that I can buy PRHSX. Interesting how much this fund has outperformed FSPHX, thanks for this nugget!

    Kiddos are doing well but are too young to understand about investing. They've been fixated on popsicles all winter (we don't know why) and have begun to share my love for Pop Tarts! So many new flavors of Pop Tarts compared to when I was their age.

    Thanks again for your post and I hope that you and your family are doing well!
  • beebee
    edited March 2017
    @BenWP,

    BCSIX not only has a nice portfolio of Small Cap HC, but a large inventory of SC Tech. Combine this with a long history of great management makes this fund a keeper, but you already knew that.

    Thanks for pointing out this fund to the thread.
  • @PopTart
    You may choose to mix and match then, eh? As I noted, both funds are running similar returns to one another during the past 5 years or so. Of course, everyone must determine their own comfort level with any of this; and in particular, what percentage of a sector holding is of value to be meaningful to an overall portfolio. Our measure here has been that anything less than a 10% holding may not provide enough "bump". 'Course, the same thought applies to the downside, too.
    Dollar cost averaging, which most encounter during a working career determines a method for attaining a percentage goal for any holding.
    But, you're investing while young; and that is the overwhelming wonderful.
    Take care,
    Catch
  • edited March 2017
    @bee @catch22 Thanks! I just checked BCSIX via my Fido account and it's closed to new investors. Looks like a good fund to watch, hopefully it will re-open.

    I always dca into funds. Hopefully time is on my side ...

  • I think PRHSX is open again. It had closed for a year or two, as I recall. I had a decent position built, but sold it for political considerations. Not sure if I'll go back into that or Vanguards - I need to review their allocations. I do hold Tekla monthly-income healthcar CEFs in my Roth IRA though.
    PopTart said:

    @catch22 - Thanks for posting so much info! In addition to my Fido account I've opened a Price account, which shows that I can buy PRHSX. Interesting how much this fund has outperformed FSPHX, thanks for this nugget!

    Kiddos are doing well but are too young to understand about investing. They've been fixated on popsicles all winter (we don't know why) and have begun to share my love for Pop Tarts! So many new flavors of Pop Tarts compared to when I was their age.

    Thanks again for your post and I hope that you and your family are doing well!

  • Hi @rforno

    At the internal Fidelity page for PRHSX, this fund is noted as "closed to new investors" in RED.
    The below link is a snippet of the most current holdings info for FSPHX.

    https://fundresearch.fidelity.com/mutual-funds/composition/316390301

  • Maybe closed at Fido ... but TRowe's main fund page says "Open to new Retail investors / Open to subsequent Retail investments"

    https://www3.troweprice.com/fb2/fbkweb/snapshot.do?ticker=PRHSX
    catch22 said:

    Hi @rforno

    At the internal Fidelity page for PRHSX, this fund is noted as "closed to new investors" in RED.
    The below link is a snippet of the most current holdings info for FSPHX.

    https://fundresearch.fidelity.com/mutual-funds/composition/316390301

  • @rforno
    Yes, to your note.
    I'm sure there are also a number of retirement plans that continue to have this offering, too.
  • After a long time of ANALysis, I have recently started trading them. Sector fund IMO are for trading. I use the major sectors for analysis (not gold).

    Currently I'm in consumer staples, utilities and healthcare. Use profunds so no trading fee issues. FWIW.
  • We use Vanguard Health Care, ETF (VHT ) for taxable account; excellent tax efficiency. For our IRA, we use a combination of PRHSX and VGHCX. We side stepped Fidelity's offering due to too frequent manager turnover.
  • PRHSX is open for retail customers at E*TRADE and t-rowe-price-health-sciences-fund-to-reopen-to-new-investors it should be at Fido too.
  • Many thanks to all for your suggestions, all are very helpful!
Sign In or Register to comment.