How Healthcare Mutual Funds Can Help You Navigate 2025's Market Swings

Healthcare has quietly become one of Wall Street’s most compelling sectors in 2025. After years of being overshadowed by high-growth plays, the healthcare industry is drawing fresh investor interest thanks to its steady nature and reasonable pricing. The S&P 500 Healthcare Select Sector SPDR (XLV) has climbed 15.3% so far this year, signaling growing confidence in the space.

Why Healthcare is Gaining Traction Right Now

What’s driving this shift? Several factors are at play. First, market volatility has pushed investors toward sectors with predictable demand—and healthcare fits that bill perfectly. With an aging population, increasing medical needs, and ongoing focus on treatment improvements, the sector has durable tailwinds that don’t disappear when markets dip.

Second, valuations look reasonable. Compared to many competing industries, healthcare stocks aren’t stretched, making them attractive for investors who care about fundamentals rather than chasing hype. Innovation matters too. Breakthroughs in medical technology and efficiency improvements are creating sustainable growth potential, not just short-term momentum.

That said, challenges persist. Policy uncertainty around pricing and reimbursement continues to weigh on sentiment, while rising labor and operational costs are pressuring margins. Still, the fundamentals remain solid enough to justify an allocation to the sector.

The Advantages of Healthcare Mutual Funds

Rather than picking individual healthcare stocks, many investors are turning to mutual funds. Why? Mutual funds offer clear advantages—they slash transaction costs compared to buying individual stocks, spread risk across dozens of holdings without drowning you in commission fees, and give you professional management all wrapped into one vehicle.

If you’re considering this route, here are three standout options worth examining.

PRHSX: The Balanced Growth Play

T. Rowe Price Health Sciences (PRHSX) focuses on companies across the entire healthcare value chain—researchers, manufacturers, and distributors of medical products and services. Lead manager Ziad Bakri has steered the fund since April 2016, building a portfolio with meaningful stakes in Eli Lilly (8.7%), Intuitive Surgical (4.8%), and Stryker (4.6%).

The numbers are solid: a 3-year annualized return of 6.9% and 5-year return of 5.6%, with a low expense ratio of just 0.83%. It carries a Zacks Rank #2 (Buy), making it a sensible choice for patient investors seeking broad exposure to healthcare innovation.

JNGLX: The Life Sciences Specialist

Janus Henderson Global Life Sciences (JNGLX) takes a more focused approach, concentrating heavily on life sciences companies. Andrew Acker has managed the fund since April 2007, handpicking positions that capitalize on the sector’s secular growth story.

The top three holdings tell the story: Eli Lilly (8.8%), UnitedHealth Group (4.5%), and AstraZeneca (4.1%). Performance has been notably stronger here—JNGLX delivered 11.3% annualized returns over three years and 8.7% over five years. At 0.80% expense ratio and a Zacks Rank #2, this fund offers higher growth potential for those willing to accept a tighter sector focus.

FSPHX: The Quality Operator

Fidelity Select Health Care (FSPHX) takes a rigorous fundamental approach, analyzing financial strength and competitive positioning before making moves. Edward Yoon has captained the fund since October 2008, deploying a non-diversified strategy that concentrates capital in the best ideas.

Top positions include Boston Scientific (7.5%), Danaher (6%), and Eli Lilly (5%). While the 5-year return of 5.3% trails its peers, the 3-year return of 7.9% shows solid momentum. With the lowest expense ratio at 0.62% and a Zacks Rank #1 (Strong Buy), FSPHX is ideal for investors who prize management quality and cost efficiency.

The Case for Healthcare Mutual Funds in Your Portfolio

All three funds share similar DNA: minimal initial investments under $5,000, positive returns across both time horizons, and expense ratios that won’t eat into your gains. The real choice comes down to your preference—balanced broad exposure (PRHSX), concentrated life sciences bet (JNGLX), or quality-focused approach (FSPHX).

What ties them together is the mutual funds advantages they provide: lower costs than stock picking, professional oversight, and simplified entry to a sector with genuine long-term demand drivers. In an uncertain market, that combination deserves serious consideration.