3 Funds to Gain from Rising Trends in Telehealth – April 14, 2020

In the past couple of weeks, the United States has witnessed a surge in demand for telemedicine and telehealth services. After all,millions of Americans are confined to their residences till April-end and hospitals and treatment centers are overwhelmed with COVID-19 patients. The scenario has made remote medical assistance more popular amid the pandemic-triggered lockdown

In addition, President Donald Trump’s initiative to make remote healthcare more accessible especially in this scenario is turning out to be helpful as well. Let us, thus, take a look at a few mutual funds that could gain from this rising trend.

Telemedicine: An Essential Service Right Now

Despite the increasing adoption of telehealth services over the years, the area couldn’t acquire a mainstream status. Doctor-patient interactivity is the main reason behind patients not entirely relying on this process. After all, patients fear that the lack of physical interactivity may affect proper medical diagnosis and consultation. Integral diagnostic measures, such as checking the pulse or listening to the chest are necessary, which can’t be carried out on a digital platform.

However, the scenario is very different right now, amid the coronavirus pandemic. Since the highly infectious, flu-like disease has put strict social-distancing measures in place, remote healthcare is the only feasible option for patients who aren’t critically ill. Given that the country’s hospitals are mostly packed with coronavirus patients, it’s better to stay away from those locations to avoid contamination.

Telemedicine offers the necessary physical separation between doctors and patients amid the pandemic. Also, public-health systems are fast catching on this new trend after realizing the massive potential it holds. In fact, in March, the Centers for Medicare & Medicaid Services (CMS) expanded access to Medicare telehealth services for nearly 60 million elderly people in the United States. The policy changes were developed on the regulatory flexibilities granted under Trump’s emergency declaration.

The package of telehealth facilities is being extended on a temporary and emergency basis under the 1135 waiver authority and Coronavirus Preparedness and Response Supplemental Appropriations Act. Under this Act, Medicare covers office, hospital and other visits equipped with telehealth facilities in the United States and at patients’ residences from Mar 6, 2020 onward.

The effectiveness and low-risk nature of remote medical consultation made it a popular choice right now. In addition, features like chatbots and smartphones equipped with remote self-examination systems are proving to be of great assistance.

Immense Opportunities for the Telehealth Market 

The telehealth market is growing by leaps and bounds, which is why one must consider its prospects. Per a MarketsandMarkets report, the global telehealth market is projected to see a CAGR of 16.9% during the forecast 2020-2025 period, reaching $55.6 billion by 2025 from $25.4 billion in 2020.

3 Funds to Buy

We have, therefore, selected three mutual funds that invest in companies which offer telehealth services. These funds have invested in securities of companies such as Novartis AG ADR, Sanofi SA ADR, Amgen Inc, Eli Lilly and Co, Danaher Corp, Abbott Laboratories, Thermo Fisher Scientific Inc, Humana Inc and Anthem Inc, all of which offer telehealth services and are actively working toward increasing these services.All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). In addition, the minimum initial investment for these funds is within $5,000.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

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: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Pharmaceuticals Portfolio (FPHAX Free Report) aims for capital appreciation. The non-diversified fund invests the majority of its assets in securities of companies that research, develop, manufacture, market or distribute pharmaceuticals and drugs. The fund invests in U.S. and non-U.S. stocks alike. Novartis AG ADR, Sanofi SA ADR, Amgen Inc and Eli Lilly and Co are among the fund’s top holdings.

This Zacks Sector – Health has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FPHAX has an annual expense ratio of 0.80%, which is below the category average of 1.24%. It has returned 9.1% over the past three years. The fund has no minimum initial investment.

Fidelity Select Medical Technology and Devices Portfolio (FSMEX Free Report) fund aims for capital growth. The fund invests the majority of its assets in securities of companies that research, develop, manufacture, distribution, supply ormarket medical equipment, devices and related technologies. The fund may invest in companies that work toward discovering drugs and providing information technology services mostly to health care providers.

The non-diversified fund mostly invests in common stocks of companies. Danaher Corp, Abbott Laboratories and Thermo Fisher Scientific Inc are among the fund’s top holdings.

This Zacks Sector – Health has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSMEX has an annual expense ratio of 0.73%, which is below the category average of 1.24%. It has returned 12.6% over the past three years. The fund has no minimum initial investment.

Janus Henderson Global Life Sciences Fund Class A (JFNAX Free Report) aims for capital appreciation over a long period. The fund invests the majority of its assets in securities of companies that have a life sciences orientation. The fund invests at least one-fourth of its net assets in the life sciences sector. Novartis AG ADR, Humana Inc, Anthem Inc and Abbott Laboratories are among the fund’s top holdings.

This Zacks Sector – Health has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

JFNAX has an annual expense ratio of 1.00%, which is below the category average of 1.24%. It has returned 8.3% over the past three years. The fund has a minimum initial investment of $2500.

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