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Healthcare is a sought-after sector for investors looking to add a safeguard to their portfolio in a volatile market. This is because of the defensive nature of the sector. The demand for healthcare services is not dependent on the upheavals of a market, and hence, provides protection against market volatility. Additionally, pharmaceutical companies are known to offer regular dividends. This showcases financial stability and the ability to generate stable cash flows regardless of the market condition.

Global spending in the healthcare sector was about $8 trillion at the end of 2022, of which almost half is accounted for by the United States. Health spending in the United States is projected to grow at an average annual rate of 5.4% for 2019-2028 and to reach $6.2 trillion by 2028. With the sector growing significantly faster than the overall global economy, these numbers and the United States' share in the pie might only keep increasing.

Healthcare has also bucked the trend of 2022 and has actually seen growth in the ETF market. The S&P 500 Select Sector SPDR for Healthcare (XLV) grew 3.1% over the past year as of Jan 31, 2023. Healthcare mutual funds are, thus, great options for investors seeking to hold a diversified portfolio and are looking toward the future. The sector may not be reaping dividends like it was in the early Covid-19 years, but it will be resilient and continue to grow in the decades to come.

Hence, astute investors should invest in healthcare mutual funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected four such healthcare mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.

Fidelity Advisor Biotechnology Fund FBTIX primarily invests in common stocks of companies principally engaged in the research, development, manufacture and distribution of various biotechnological products, services and processes. To select their investments, FBIOX advisors use fundamental analysis of factors such as each issuer's financial condition and industry position, as well as market and economic conditions.

Eirene Kontopoulos has been the lead manager of FBTIX since Jul 14, 2018. The fund has 13.5% of its portfolio invested in AbbVie, 9.2% in Vertex Pharmaceuticals and 6.7% in Regeneron Pharmaceuticals.