Opting for health alternatives

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Q: I have been hoping to invest in alternative-healthcare companies. I can't find any mutual funds grouped in this way. Do you know of any?
L.Y., King City, Calif.

A: "To my knowledge, there are no funds that deal with companies that engage in nontraditional healthcare methods," says Peter DiTeresa, who follows healthcare funds for information firm Morningstar Inc., in Chicago.

Most alternative health companies tend to be privately held, says Mr. DiTeresa, so they wouldn't normally be in a fund.

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DiTeresa counts 69 traditional healthcare funds. But he says they can be risky. "Don't put more than 5 to 10 percent of your portfolio in a health fund," he says. If you do invest in one, "look for a fund that diversifies into different aspects of the sector."

Conversely, there are at least 55 funds that do not invest in healthcare stocks, according to Morningstar research.

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