The economy may be in a steep slide but life goes on for most people. Focusing on necessities may help you invest successfully this year. Possibilities to consider:
* Health care funds. Good times or bad, people will see doctors, take diagnostic tests, and purchase the indicated prescription drugs. Thus, mutual funds that focus on health care companies might prosper. Although health care funds lost 23 percent last year, on average, that was much better than financial funds (-44 percent) or technology funds (-45 percent).
Within the health care category, last year’s leading performers include Eaton Vance Worldwide Health Sciences (down 7.2 percent in 2008), Rydex Biotechnology Investors (down 10.5 percent), and Franklin Biotechnology Discovery (down 10.6 percent). Among them, the Eaton Vance fund–which has a strong exposure to biotech companies such as Genentech and Imclone Systems–has the best long-term record, returning almost 9 percent a year for the past 10 years.
* Utilities funds. Again, people will need gas and electric service in all kinds of economic environments. Utilities funds vary greatly, from one to another, but the funds that focus purely on power providers may be most recession-proof. Franklin Utilities Fund, for example, invests in regulated utilities companies and passes through a yield of nearly 4 percent.
