Deep Dive: Fund that almost tripled the S&P 500’s gain last year is now big on health-care stocks

Michael Gregory, whose energy-stock picks helped the Highland Small Cap Equity Fund almost triple the return of the S&P 500 Index last year, now says the out-of-favor health-care sector could stage a “tremendous rebound” in 2017.

The mutual fund’s Class A shares HSZAX, +0.14% returned 31.6% in 2016, compared with returns of 12% for the large-cap S&P 500 SPX, -0.09% and 21.3% for the small-cap Russell 2000 Index RUT, -0.36%

Gregory is chief investment officer of Highland Alternative Investors, a unit of Highland Capital Management, which is based in Dallas and manages about $15.4 billion.

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