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Health funds bolt the gate
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January 17, 2000: 3:37 p.m. ET
The sector has caught fire in the first two weeks of the year with big gains
By Staff Writer Martine Costello
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NEW YORK (CNNfn) - It's almost as if Sam Isaly's mutual fund took a miracle drug in the last two weeks.
Isaly, manager of the Eaton Vance Worldwide Health Sciences Fund, said returns soared 11.1 percent in the first 10 trading sessions of 2000, a profit that some funds earn in an entire year.
The fund gained another 3.5 percent on Friday alone, thanks to skyrocketing U.S. biotech stocks, recent drug mergers, and strong performance by international companies in the sector.
"Our U.S. biotechs are screaming ahead," a jubilant Isaly said on Friday. The fund has $270 million in assets. "(But) there's been a broad-based rally."
Health care funds had an uneven 1999. Out of 30 funds tracked by Morningstar, 11 earned 21.02 percent to as much as 111.48 percent. But eight funds earned less than 10 percent or broke even, while another eight funds lost as much as 29.59 percent. The Eaton Vance earned 23.92 percent in 1999.
"There was a separation (last year) between the best and the worst," Isaly said. Biotech stocks flourished while U.S. large-cap stocks were largely flat.
The results were so skewed that the Rydex fund family had both a winner and a loser, Morningstar said. Rydex Biotechnology Fund earned 95.52 percent, while Rydex Health Care Fund lost 13.06 percent.
In 2000, however, 15 health care funds are at the top of the list year to date through Jan. 14 out of 3,839 U.S. stock funds, beating high-flying growth funds and tech funds.
Other top health care funds include Munder Framlington Healthcare Fund, up 14.38 percent; Franklin Biotechnology Discovery Fund, up 12.90 percent; and Rydex Biotechnology Fund, up 12.77 percent, according to Morningstar.
Isaly is looking for better performance by drug companies like Merck (MRK), Pfizer (PFE) and Eli Lilly & Co (LLY).
Ken Kam, manager of the Firsthand Medical Fund, said part of the success of biotech stocks is the progress made in 10 years of genetic research. The fund, with $25 million in assets, is up 10.2 percent as of Thursday. The fund earned 52.18 percent in 1999.
"We're seeing the fruition of almost a decade worth of work," Kam said. "It's defining the genetic code for human life ... If you can find what part of the genetic code caused those diseases, you can cure them."
Kam said some of his favorite stocks include genetics company PE Corp.-Celera Genomics (CRA) whose stock has soared from a low of 15/32 to 232 in the last year. He also likes Affymetrix (AFFX), a developer of technology to analyze genetic data.
Merrill Lynch is the latest Wall Street investment house to launch an Internet fund. The Merrill Lynch Internet Strategies Fund will invest in Internet and related businesses, the company said in a filing with the Securities and Exchange Commission on Friday.
Paul Meeks, manager of Merrill Lynch Global Technology Fund, will head the Internet fund. Meeks was unavailable for comment on Monday.
Merrill Lynch isn't the first traditional name to venture into Internet stocks. Last year, Goldman Sachs launched Internet Tollkeeper Fund, and veteran growth stock picker David Alger headed up Enterprise Internet Fund.
-- If you have any questions or comments about mutual funds, e-mail us at mailto:cnnfn.interact@turner.com 
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