PRHSX: T. Rowe Health Sciences Fund Top Holdings Analysis

The T. Rowe Price Health Sciences Fund (“PRHSX”) is a great option for investors looking for investment options within the health care sector. The fund normally has around 80% of its total assets allocated to companies of all capitalizations in the health care sector, including pharmaceuticals and biotechnology stocks. As of March 2016, the health care stock fund has declined 13.87% year to date (YTD), but it rallied 19.55% over the past three years, 21.95% over the past five years, 14.17% over the past 10 years, and 13.25% over the past 15 years.

As of March 2016, the mutual fund has total assets of $11.7 billion, an annual turnover ratio of 31%, an expense ratio of 0.76%, no yield, and a five-star rating from Morningstar Investment Research.

Turning to the fund’s assets, 89.84% of the fund's portfolio is allocated to U.S. stocks, 6.12% to non-U.S. stocks, 2.55% to cash and 1.49% to other investments, as of December 2015. More specifically, it has 128 long stock positions and 20 other long positions. While health care dominates sector allocations with 95.43% of the overall portfolio, the fund does have 2.33% allocated to consumer defensive stocks, 1.32% to technology stocks, 0.62% to industrials and 0.29% to financial services.

The following are the fund’s top holdings, as of June 30, 2016.

Health insurance company Aetna Inc. (NYSE: AET) maintains the fifth-largest position in the T. Rowe Price fund’s top holdings. The fund holds 4.1 million shares of Aetna, which is 3.15% of the overall portfolio, as of December 2015. The shares were first purchased by the fund in March 2012. On July 2015, the company has agreed a merger agreement with Humana Inc. (NYSE: HUM).

The T. Rowe Price Health Sciences Fund's largest position is in shares of Allergan PLC Ordinary Shares (NYSE: AGN). The fund had over 2.7 million shares, weighting at 5.96% of the overall portfolio. The fund first purchased the shares in December 2013. Health care stocks have suffered in early 2016, including Allergan with a YTD decline of 12.76%, as of March 2016.

Becton Dickinson (NYSE:BDX) is a leader in the medical devices space and earns two-thirds of its revenue from outside the United States. 

Overall, health insurance and benefit providers have helped the fund early on in 2016, despite overall losses for the fund on the year. Pharmaceuticals in particular are continuing to be hit hard with scrutiny from U.S. government regulators over drug price increases that were considered unduly large. In addition, while health care stocks have been some of the best performing stocks during the current bull market, the health care sector is the worst performing U.S. sector with YTD losses of 9.40%, as of March 2016. With weakness currently holding most of the health care sector, the T. Rowe Price Health Sciences Fund will likely continue to follow suit and take a breather after years of strong returns.