The Daily Screen: The Best Health Care Funds

In a gory year for stocks, health care funds have been stars. That's where today's Daily Screen turns its attention.

These funds typically have the leeway to invest in drug makers of all sizes, HMOs, hospitals, medical device makers, or even software shops that help docs cut down on their business's paper chase. But over the past couple of years, the top health care funds have been those that focus on biotech companies, the small high-tech labs that develop new medications.

Over the past year, the American Stock Exchange Biotechnology Index is up a startling 148%, according to Baseline. But it might be a pretty fatal mistake to plan on biotechs holding anything close to that pace. Yes, the mercurial sector is known for these types of performance bursts, but it's also known for long droughts. Consider that the same index posted a cumulative 3.3% loss from January 1993 to January 1996. So far in October, the index is off more than 16%. ...