Stock-Market Rally to Hit Full Stride

The $768 million Fidelity Select Medical Delivery Fund (FSHCX) leads all equity funds with a 24% return this year through May 9, according to a Morningstar ranking. It has a 39% return over the past 12 months, but it should be noted that the fund lost 44% of its value in 2008 when the stock market collapsed.

Select Medical Delivery's volatility is due to its narrow agenda: Managers may invest only in health insurers, hospitals and other health-services providers. The fund, which comprises 64 holdings, has been managed by Andrew Hatem since February 2009.

Medco Health Solutions (MHS), the nation's largest pharmacy-benefits manager through its mail-order pharmacy and network of retail pharmacies, is the fund's largest holding at 10%. Medco's shares are up 4.9% this year.

Express Scripts (ESRX), at 8.9% of the fund's assets, is the No. 2 position. The company competes directly with Medco.

UnitedHealth Group (UNH) makes up 7% of Select Medical Delivery. The company's stock is up 40% this year. UnitedHealth, with 77 million subscribers, offers risk-based health insurance, non-risk-based plan management for self-insured employers, Medicare and Medicaid plans, pharmacy benefits and database and consulting services. Its subsidiaries include UnitedHealthcare, OptumHealth and OptumRx.

One of the hottest performers for the fund is Healthspring (HS), up 65% this year. The company is a Medicare-focused managed-care organization that provides health benefits to 162,000 subscribers throughout Tennessee, Texas, Alabama, Florida, Illinois and Mississippi.

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