It has been a good year for the market in general, but an especially stellar for healthcare stocks. According to data from Morningstar, healthcare mutual funds have returned more than 25% on average, compared to a nearly 17% total return for the S&P 500.
But even if healthcare stocks were right on par or even worse for just a few months in 2013, there’s no denying the sector’s attraction based on its exposure to some powerful megatrends.
At the forefront is simple age. The U.S. population is getting older — there are 78 million baby boomers, and about 10,000 are reaching 65 each day — fueling the need for more medication, more care and more facilities to keep them ticking.
Then you have more specific factors such as obesity, which has reached worrisome levels, impacting more than 35% of the U.S. population. And obesity relates to an assortment of ailments — including heart disease, stroke, type 2 diabetes and certain types of cancer — so you can imagine just how much money’s at stake for pharma on that front alone.
So, how can you get exposure to healthcare without banking on a few individual companies that might or might not find the next great cure? Mutual funds or ETFs, which cover large swaths of the industry and allow you to hold dozens of companies in a single fund.
Here are three in specific that you should consider: