Health care funds soared again in 2013, but some worry about the stocks' feverish gains. The average health care fund leaped 48.3% in 2013 through Friday, vs. a 33.4% gain for the average stock mutual fund, according to Lipper. "It's more impressive when you take into account that this is the third consecutive year that health care has outperformed," says Jeff Loo, equity research analyst for Standard & Poor's. The health care sector was playing catch-up in 2011 and 2012, when the sector was undervalued relative to the broad S&P 1500, Loo says. Because of this year's runup, that's no longer the case. Health care stocks sell for about 16.6 times estimated 2014 earnings now, vs. 15.2 for the S&P 1500. "They're not cheap anymore," Loo says.
