Ongoing worries, including weak global growth, strengthening dollar and the persistent slump in oil price, appear to have affected Q4 corporate earnings. Amid this dismal backdrop, the medical sector has emerged as one of the few bright spots. And the sector’s outlook for the coming quarters also looks impressive.

As such, fundamentally strong funds from this sector may offer favorable investment propositions.

Medical Sector Outperforms

Total earnings of the 388 S&P 500 members that reported Q4 results as of Feb 17 declined 6.4% year over year on 4.6% lower revenues. And nine out of the 16 Zacks sectors are expected to suffer an earnings decline in their Q4 results. Total earnings for the S&P 500 members are expected to decline 6.7% year over year.

In spite of the overall softness, companies from the medical sector that have reported as of Feb 17 registered total earnings growth of 7.4% on 9.1% higher revenues. The sector is expected to witness earnings growth of 9.2% on 9.4% higher revenues for the quarter.

Earnings and revenues for the sector are also expected to grow in 2016. For the ongoing quarter, the sector is predicted to register earnings and revenue growth of 3.8% and 8.4%, respectively. (Read: Earnings Picture Not Expected to Improve)

Some of the major players from this sector including Regeneron Pharmaceuticals (REGN – Analyst Report), UnitedHealth Group Inc. (UNH – Analyst Report) and Gilead Sciences, Inc. (GILD – Analyst Report) posted impressive results for the fourth quarter.

What Will Boost Medical Sector in 2016?

The Affordable Care Act (ACA) is likely to play an important role in boosting the healthcare sector this year. With a gradual decline in the unemployment rate and healthy job additions over the past few months, new employees should widen the coverage of health insurance and perk up demand in the sector. Moreover, government spending on healthcare is also expected to rise nearly 4.9% this year. It is estimated that Medicare and Medicaid spending may increase to over $1.25 trillion in 2016.