Vanguard Health Care
Vanguard Health Care (VGHCX) is an interesting pick right now, as the fund must go without longtime manager Edward Owens, who retired at the end of 2012. Owens had been at the helm since 1984 and averaged 16% annually since then, compared to 11% for the S&P 500.
While investors naturally tend to be skeptical when a standout manager leaves, VGHCX should see a smooth transition. New chief Jean Hynes also is a top-notch money manager, starting as an analyst with the fund in 1992 and becoming a co-manager in 2007.
Hynes has performed well this year, leading VGHCX to 23% year-to-date returns. The fund also benefits from an affordable expense ratio of 0.35% on Investor Class shares, as well as a buy-and-hold approach that keeps portfolio turnover to a mere 8%.
The fund is somewhat similar to XLV in its industry breakdowns, though it’s more diverse in its number of holdings (91 to XLV’s 57) and isn’t as top-heavy. Merck is VGHCX’s No. 1 holding at 6%, followed by Amgen, UNH, Forest Laboratories (FRX) and Roche (RHHBY).
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.