It's often said that fund managers' favorite game is follow the leader. And this year health care stocks have been the leader.

Since Jan. 1, health care sector funds are up 40.9%, on average. That's nearly double the 21.9% rise of the runner-up sector, real estate, and it trounces the 6.9% average gain for technology sector funds.

If health care stocks keep their torrid pace, and if history is any guide, many of those stocks will be turning up in your portfolio -- even if you don't own a health care sector fund.

After technology-sector funds gained an average of 137% in 1999, growth fund managers this year plowed an average of 44% of their funds' assets into the sector, according to Morningstar.

So keep an eye on your portfolio's sector allocations. If several of your funds start gobbling up more health care stocks and you already own a health care fund, you should be wary of becoming overexposed to the sector. Some funds have already started increasing their health care stake, as we see in this week's The Big Screen.

Here are the 10 diversified growth funds with health care weightings that have jumped the most over the last 18 months or so. To make our list, a fund had to be diversified (that is, not focused on a particular sector), and its most recent portfolio information had to be made public at least as recently as June 30.

Healthy Returns?
Here are the 10 growth funds that have raised their stake in health care stocks the most since 1998.
Fund June 30
Health Care Stake
1998
Health Care Stake
YTD Return
(NAEGX) Pilgrim Small Cap Growth 24.2% 9.3% 3.9%
(HAGAX) Heritage Aggressive Growth 21.4 0.9 19.1
(NSOAX) Wells Fargo Small Cap Opportunities 21 10.5 26
(TGMOX) TCW Galileo Earnings Momentum 20.5 11.1 -0.3
(TAEMX) John Hancock Small Cap Growth 20 10.6 -3.1
(QUASX) Alliance Quasar 18.8 5.8 3.2
(TGCEX) TCW Galileo Select Equity 18 6.2 18
(AGTHX) Growth Fund of America 17.2 7.5 20.9
(PSMCX) Preferred Small Cap 15.4 3.7 3.8
(SEGAX) SunAmerica New Century 14.1 5.1 3.9
S&P 500 11 10.8 1.6
Source: Morningstar and Baseline. Performance figures through Aug. 17.

All but three of the funds on the list ( ( SEGAX) SunAmerica New Century , ( AGTHX) Growth Fund of America , and ( TGCEX) TCW Galileo Select Equities ) are composed of mostly small-cap stocks, according to Morningstar. That makes sense because much of the action in the health care sector has been among small biotechnology companies -- the cutting-edge labs where new drugs are developed.

The Human Genome Project, a private/public effort to map human genes making it easier to pinpoint the roots of disease, has clearly struck a chord with investors. Over the last 12 months the American Stock Exchange Biotechnology Index is up 156%; it has risen 71.9% since Jan. 1.

Bigger-cap pharmaceutical stocks, which often have a tough time in election years, haven't been such rockets. The American Stock Exchange Pharmaceutical Index is up just 13% this year, according to Baseline. (For a more detailed look at the sector, see this week's 10 Questions interview with veteran ( MAHCX) Merrill Lynch Healthcare manager Jordan Schreiber.)

As you can see from the variance in returns among the funds on the list, upping an allocation to a hot sector doesn't guarantee hot performance. Also, many of these funds' managers haven't been on board for three years, so in some cases the shift toward health care could have more to do with a new manager's tastes than with any bandwagon mentality.

Some of the better-performing small-cap funds on the list have added stocks this year like COR Therapeutics ( CORR) ( ( NAEGX) Pilgrim Small Cap Growth ), Lexicon Genetics ( LEXG)( ( HAGAX) Heritage Aggressive Growth ), and Community Health Systems ( CYH) ( ( NSOAX) Wells Fargo Small Cap Opportunities ). COR Therapeutics is up a whopping 234% so far this year, while Lexicon and Community Health are recent IPOs .

Perhaps the most intriguing name on the list is the $36.8 billion Growth Fund of America, which has racked up a gain of 20% this year despite its girth, according to Morningstar, while its average peer has flat returns. It is part of the low-profile but well-regarded American Funds fleet and is the eighth-largest fund in the nation.

Most recently, the fund's management team built up its positions in big-cap pharmaceutical houses Pfizer ( PFE) and Pharmacia ( PHA), which are up 36.6% and 69% this year, respectively.

Of course, the opposite of these growth funds are those that have significantly reduced their stake in health care stocks over the last 18 months. Here's a list of the five growth funds that have headed most drastically away from the sizzling sector.

Some Like It Cool
The five growth funds that have reduced their health care stake the most since 1998.
Fund June 30
Health Care Stake
1998
Health Care Stake
YTD Return
(ENCAX) Enterprise Capital Appreciation 5.5% 27.7% -2.4%
(EATRX) Eastcliff Total Return 13.1 29.8 2.9
(NMGAX) Nationwide Mid Cap Growth 4.3 27.3 56.6
(SRFCX) Stein Roe Capital Opportunities 2.3 20.5 13
(OSTAX) Phoenix-Seneca Strategic Theme 0.9 18.5 22.9
S&P 500 11 10.8 1.6
Source: Morningstar and Baseline. Performance figures through Aug. 18.

Again we see another wide range of results this year, showing that sector shifts don't necessarily predict performance. An interesting fund on this list is broker-sold ( NMGAX) Nationwide Mid Cap . The little-known fund has been run by tech specialist Aaron Harris since April.

You might remember that Harris helped manage the institutional ( NGTIX) Nicholas-Applegate Global Technology fund, which was 1999's No. 1 fund with a jaw-dropping 494% return. More than 80% of the fund is now in tech stocks, and it has returned 41.1% over the last three months, beating virtually every other mid-cap growth fund.

There you have it, some funds that are doubling their dosage of health care stocks and others that are treating them like the plague. If you own funds that are in either camp and ignore the diversification challenges they raise, you could unwittingly end up with an imbalance of health care stocks.