4 Best Healthcare Mutual Funds to Bet on for the Rest of 2020

America's healthcare industry had been performing remarkably throughout 2019 and has continued the momentum so far this year. This industry has also attracted extended attention following the coronavirus outbreak. As the virus continues to wreck havoc across the globe, investors has shifted focus on those biotechnology companies that have shown progress in development of a potential cure from COVID-19.

So far 142 vaccine candidates are in early development with 35 of them in clinical trials. Of this, only five are vaccines inches away from approval and large scale vaccine trials are about to begin. The University of Oxford’s vaccine candidates have been showing promising results and Phase 3 clinical trials are in progress with thousands of volunteers.

The U.S. government has so far invested $1 billion each in five different projects, either in the form of funding or in advance deals. The companies in limelight for vaccine race are Moderna (NASDAQ:MRNA), Johnson and Johnson, Astra Zeneca, Novavax (NASDAQ:NVAX) and Pfizer (NYSE:PFE). On successful discovery, these companies can supply 100 to 400 million doses to American citizens. In fact, Pfizer aims to produce about 1.3 billion doses by the end of 2021. On Jul 22, Pfizer struck a deal with the U.S. government to provide 600 million doses for $1.95 billion.

Moderna’s mRNA program helps immune system recognize and neutralize the virus by mimicking it surface. The program has received nearly a billion dollar from the U.S. government and helps in financing Moderna’s multiple vaccine candidates under the Operation Wrap Seed Program. The company aims to produce around 500 million to 1 billion doses a year, beginning 2021.

Apart from the coronavirus-led vaccine race, another constant factor that grabs investors’ attention toward biotech companies is progress in clinical-trial stages, making them bet on long-term prospects of drugs or therapies. Moreover, these companies characteristically survive market gyrations and recessions.

Given the current scenario, analysts also expect some of the biotech stocks to skyrocket and rake in big gains, thereby boosting the overall healthcare industry. With multiple companies having impressive products in pipelines which are likely to become blockbuster drugs or therapies, the biotech industry is sure to maintain a northward movement. Meanwhile, biotech ETFs has also seen an uptick so far this year. iShares Nasdaq Biotechnology ETF (IBB) has gained 13.4% so far this year, while both SPDR S&P Biotech ETF (NYSE:XBI) and First Trust Amex Biotechnology Index (FBT) have added nearly 18% year to date.

Given the current scenario, we have highlighted four healthcare mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to gain. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: To read this article on Zacks.com click here.

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Written By: Zacks Investment Research