Top 10 Funds That Aren't in Your 401(k)

The 10 best performing equity mutual funds in July are not likely to be offerings in your 401k plan. Most companies limit the number of fund choices available to employees by excluding most narrowly focused sector funds.

If you find it impossible to adequately diversify the investments within your 401k, remember that the goal is to diversify your whole retirement nest egg. So, if you opt for broad-based growth funds in the 401k, then as a small part of an overall diversified retirement portfolio riskier sector funds may be considered for your Rollover IRA, Roth IRA or regular individual retirement accounts.

A sector rotation strategy attempts to find the few sectors outperforming the overall market and shifts money into funds holding those companies. Five of the 10 best performing funds in July were targeting the biotechnology sector.

Exceeding all other equity mutual funds, the 150% leveraged ProFunds Biotechnology UltraSector ProFund(BIPIX Quote) returned 28.35% in July. As stock investors snap up Gilead Sciences(GILD Quote), Amgen(AMGN Quote), Genentech(DNA Quote), Celgene(CELG Quote) and Biogen Idec(BIIB Quote) this fund could do well.

Banking funds like the ProFunds Banks UltraSector ProFund(BKPIX Quote), coming in at second place, bottomed and bounced back in July. But, I don't think Bank of America(BAC Quote), JPMorgan Chase(JPM Quote), Citigroup(C Quote) and Wells Fargo(WFC Quote) will be out of the woods until real estate prices head north again.

With the plethora of inverse funds available today it is easier than ever to profit from a bear market in individual sectors. The remaining four funds gained by shorting Latin America, oil & gas, emerging markets, and precious metals.

10 Best Performing Equity Mutual Funds in July
Fund (Ticker) Rating	Objective	1 Month Total Return %	3 Month Total Return %
ProFunds-Biotech Ultra Sector Inv (BIPIX) B-	Sector - Health/Biotechnology	28.35	35.34
ProFunds-Bank UltraSector Inv (BKPIX) E-	Sector - Financial Services	26.19	-26.33
Allianz RCM Biotechnology A (RABTX) D-	Sector - Health/Biotechnology	22.07	24.80
Rydex Series-Biotechnology A (RYBOX) C	Sector - Health/Biotechnology	19.03	20.40
ProFunds-Ultra Sh Latin America Inv (UFPIX) U	Non-US Equity	18.87	13.31
ProFunds Short Oil & Gas Inv (SNPIX) U	Sector - Energy/Natural Res	15.37	7.51
Profunds-Ultra Sh Emer Mkt Inv (UVPIX) U	Emerging Market Equity	15.29	23.98
Fidelity Select Biotech Port (FBIOX) C	Sector - Health/Biotechnology	13.71	18.87
ProFunds Short Precious Metals Inv (SPPIX) U	Sector - Precious Metals	13.39	-0.86
Franklin Biotechnology Discovery A (FBDIX) C-	Sector - Health/Biotechnology	13.37	19.38
Source: TheStreet.com Ratings

For an explanation of our ratings, click here.