Even though the fate of the Republican "repeal and replace" strategy is up in the air, healthcare stocks continue to have a positive outlook. Perhaps this is because demand for health services continues to rise and President Trump has promised a robust system of deregulation that could lead to impressive growth, especially in biotech. (See also: Trump Changes Obamacare Income Tax Policy.)

In addition, most healthcare companies are sitting on balance sheets flush with cash and boasting strong financials. And if history is any guide, healthcare as a sector tends to outperform when the Federal Reserve hikes interest rates, which is something that most analysts believe is on the horizon again this year. (See also: How Do Interest Rates Affect the Stock Market?)

All things considered, now might be the right time to boost your exposure to the healthcare sector. Here are some healthcare mutual funds that are poised to outperform this year. Note: Funds were selected on the basis of year-to-date (YTD) performance and total net assets. All figures were current as of December 6, 2017.

1. Fidelity Select Medical Equipment and Systems Portfolio (FSMEX)

  • Issuer: Fidelity
  • Total Net Assets: $4.01 billion
  • Expense Ratio: 0.76 percent
  • YTD Performance: 30.96 percent

This fund invests in companies involved in the research and development (R&D), manufacturing and sale of medical devices and equipment, primarily in the U.S. (about 95 percent of the fund's portfolio is domestic). Fund manager Eddie Yoon sees pockets of opportunity in the smart device market and other innovative processes that could drive future returns.

The fund has strongly outperformed both the MSCI U.S. IMI Health Care Equipment & Supplies Index and even the S&P 500 with a 1-year total return of 33.11 percent. Three-year and five-year annualized returns are 15.70 percent and 22.25 percent, respectively. A $2,500 minimum investment is required. (See also: FPHAX, FSMEX: Mutual Funds to Invest With Aging Population.)

2. Vanguard Health Care Fund (VGHCX)

  • Issuer: Vanguard
  • Total Net Assets: $47.59 billion
  • Expense Ratio: 0.37 percent
  • YTD Performance: 19.38 percent

This massive Vanguard fund is also available as Admiral-class shares (minimum investment $100,000 compared with $3,000 for Investor-class shares). An actively managed fund, VGHCX offers low-cost, broad exposure to the global healthcare industry, including pharmaceuticals, medical equipment and supplies, and R&D. There are currently 83 equities in the fund's portfolio, which is heavily weighted toward pharmaceuticals (45 percent).

This is a mature mutual fund – since its inception in 1984, the fund has delivered nearly 17 percent average annualized returns. The 1-year total return is 19.76 percent. (See also: VGHCX: Overview of Vanguard Health Care Fund.)

3. T Rowe Price Health Sciences Fund (PRHSX)

  • Issuer: T. Rowe Price
  • Total Net Assets: $11.68 billion
  • Expense Ratio: 0.77 percent
  • YTD Performance: 28.40 percent

This is a long-term growth fund that invests primarily in mid and large caps involved in R&D, production, and distribution of healthcare and life science-related products and services. The fund has 170 equities in its portfolio, with biotechnology (35.6 percent), healthcare services (24 percent) and pharmaceuticals (16.6 percent) the largest sectors. The fund has a fairly low 31.6 percent turnover rate.

Since its inception in 1995, the fund has delivered 14.64 percent average annualized returns. There is a $2,500 minimum investment required. (See also: PRHSX, FDGRX, PRDSX: Comparing Top Rated Mutual Funds.)

4. BlackRock Health Sciences Opportunities Portfolio; Investor A (SHSAX)

  • Issuer: BlackRock
  • Total Net Assets: $6.14 billion
  • Expense Ratio: 1.18 percent
  • YTD Performance: 26.08 percent

This fund's benchmark index is the Russell 3000 Healthcare Index – it currently has 105 equities in its portfolio. Top holdings include UnitedHealth Group Incorporated (UNH), Medtronic PLC (MDT) and Stryker Corporation (SYK). The portfolio diverges from its benchmark in that holdings are fairly evenly balanced between healthcare equipment and supplies and pharma/biotech.

The fund has consistently but narrowly outperformed its benchmark in each of the past 10 years. Since its inception in 1999, the fund has delivered 15.30 percent average annual returns. There is a minimum $1,000 initial investment required. (See also: 3 Best Dividend-Paying U.S. Healthcare Mutual Funds.)

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