Fidelity Fund Gets Top Rating, Bets on U.S.

The Fidelity Select Medical Equipment and Systems Portfolio garners the highest rating while betting on a recovery of the U.S. economy.
Author:
Publish date:

NEW YORK (TheStreet) -- The Fidelity Select Medical Equipment and Systems Portfolio (FSMEX) - Get Report ranks as the highest-rated stock mutual fund that bets on a recovery in the U.S. economy.

The $1.3 billion fund, with a risk-adjusted return rating of A, or excellent, for the period ending Jan. 31, has more than 82% of its assets in U.S. equities, such as

Baxter International

(BAX) - Get Report

,

Medtronic

(MDT) - Get Report

,

Stryker

(SYK) - Get Report

and

Edwards Life Sciences

(EW) - Get Report

.

Even if President Barack Obama were able to get everything he proposed from last Thursday's epic health-care summit, hardly anybody expects a contraction in health-care spending. If health-insurance reform fails to pass, legal price gouging can continue to pad the bottom lines of health-care companies. If reform passes with a strong mandate for Americans to buy insurance coverage, those same companies, which may still be able to keep prices high, could make even more by selling in higher volumes and serving more customers.

This also favors the

T. Rowe Price Health Sciences Fund

(PRHSX) - Get Report

and the

Vanguard Health Care Fund

(VGHAX) - Get Report

, both rated A-minus. The funds have large positions in

Merck

(MRK) - Get Report

.

In the unlikely event that a bipartisan compromise reduces health-care expenses of individuals and businesses, or even manages to restrain the growth rate of health-care costs, U.S. companies can become more competitive in the global marketplace. Health care aside, there are economic signs of life budding in the U.S.

Last week's durable-goods report for January showed a 3% increase in new orders, the second consecutive monthly increase. After a record 15 months of decreasing unfilled orders for manufactured durable goods, January unfilled orders reversed course and grew as inventories contracted for a 13th month.

That reveals pent-up demand, especially in computers and electronic products, which had the largest inventory decrease in January, 1.2%. The outlook is corroborated by the U.S. Census Bureau's ratio of total business inventories to sales, which has fallen to pre-recession levels.

Last Friday's revision of real gross domestic product to 5.9% from an earlier estimate of 5.7% for the fourth quarter was attributed to an acceleration in private inventory investments and exports.

Investments in place now in broad-based large-capitalization domestic growth funds can pay off in the months ahead after the recovery takes hold.

The

Putnam Voyager Fund

(PVOYX)

culminated its journey with a rating of A. This fund diversifies assets across many sectors, including 25% in technology, 17% in financials, 14% in health care, 13% in consumer cyclicals, 7% in communications and 7% in consumer staples.

Key technology holdings include

Apple

(AAPL) - Get Report

,

Microsoft

(MSFT) - Get Report

and

Cisco Systems

(CSCO) - Get Report

.

For more information, check out an

explanation of our ratings

.

-- Reported by Kevin Baker in Jupiter, Fla.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.