If one were to look at high return investments, there could be a couple of places one might look. Growth funds might be an obvious starting point, but is quite likely too generic a field to find something with true, high returns. In most cases, one will have to resort to specialized fields. Over the past three years, such a specialized field might have been gold and other resources. Just prior to the recession – agriculture. And prior to that – real estate. But Fidelity’s Select Medical Equipment and Systems has not only been one of the most steady mutual funds over the past 10 years but also one of the best high return investments.

As the name suggests, the Fidelity Select Medical Equipment and System mutual fund is a mutual fund focused on the medical equipment and systems arena. As far as growth funds go, however, this niche mutual fund has been a top performer among other growth funds, having tripled investors’ investments over the past 10 years. Compare this to the S&P 500 which has yet to return your original investment (as of January 28, 2010).

So that begs the question: what makes high this particular mutual fund so special

Well, with $1.3 Billion under management, the fund is quite large. However, it has not allowed its size to get to its head and holds a fairly tight portfolio of just under 60 securities, all of which are somehow related to the healthcare industry. In terms of investment style, the fund does not follow the others with just one or two choice deviations. In other words, it does not list list GE shares as a top holding. In fact, this top performing mutual fund is considered a mid-growth fund according to its investment style; its holdings are mid-cap and are considered growth investments (versus value investments). From a percentage-of-holdings viewpoint, though, the largest exposure is to large-cap securities; with a fairly substantial exposure to small-cap securities (roughly 10% of its total holdings) the overall investment style gets bumped downward into the mid-cap range.

The impact of this mutual fund’s investment style is that risk is marginally above average (yet is not considered high risk). This has no double allowed it to achieve above average returns over the past 3, 5, and 10 years. With the protection offered by large-cap holdings combined with the growth potential of small- and mid-cap securities, this fund has steadily outperformed the Index with the exception of one year… 2006.

The fund’s largest holding (at 14% of the portfolio, this is a big gamble) is Covidien PLC, a company that touches commercial, institutional and retail markets. Over the past year, it has added 33% to its stock price, itself a nice a return. Less than a week ago, Piper Jaffray upgraded its view on this stock to Outperform; the mean rating is a mildly strong buy… and that can explain why Fidelity has gotten in deep with this security.

Do these stats really qualify the Fidelity Medical Equipment and Systems fund as a one of the best high return investments on the market?

Well, that really depends. For investors looking to get an edge without having to take a scary amount of risk, then of course it does. With a fairly low Beta (0.76) and returns that outpace the market’s, this is one of those growth funds that makes achieving great investment returns look easy and stress-free.

But for investors who want continual mid- to high-double digit returns regardless of risk, then maybe this is not one of those high return investments. Can we suggest real estate funds? Commodity pools? A Gold bear-ETF? Even then, what are the risks and are they worth the potential returns?

See you can say just about anything that gives a 50% return is a great investment, but when you factor in risk and consistency, is it really?

That is where this fund differs and why we think it is one of the best high return investments for those with courage. High returns, marginally above average risk and a history that speaks for itself. If you’ve got $2,500 available to add diversification and a bit of specialization to your growth funds portfolio, consider the Fidelity Select Medical Equipment and Systems fund.

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