Health-care stocks have emerged as market leaders in the third quarter, helping push major U.S. indexes to new highs.
One reason: money managers are embracing the sector as a safety play, particularly after big technology stocks stumbled in September.
The S&P 500’s SPX, -0.35% health-care sector XLV, +0.20% is the best performer of the index’s 11 groups in the third quarter, up 13% and on pace for its strongest showing in more than five years. On a year-to-date basis, health-care stocks are trailing only the technology XLK, +0.50% and consumer-discretionary sectors XLY, -0.65%
Hedge funds have built up their biggest position in health-care shares of the past five years. About 17% of their assets are in the sector, second only to shares of tech companies, according to Goldman Sachs Group Inc. GS, -1.04% data through June. Mutual-fund managers have also been shifting into health-care stocks, with many building outsize positions, according to Goldman’s data.
An expanded version of this report appears on WSJ.com
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