Although we generally avoid following trends, two themes have worked well for investors over the past few months: health care and precious metals. Both investments play off shifting sentiment, one for the better and one for the worst.

We’ve devoted a lot of space to the health care sector over the past few months, as the likelihood of game-changing reform continues to ebb. Thus far we’ve focused primarily on sector-specific funds (See September 2009, New Approaches), but many subscribers have asked for diversified funds that offer exposure to this theme.

To that end, here are two of our favorite large-cap funds that devote a significant portion of their assets to the health care industry.

Bruce Berkowitz, manager of large-cap blend fund Fairholme (FAIRX), focuses on companies that generate substantial free cash flow and currently allocates over 40 percent of the fund’s assets to health care names.

Pfizer (NYSE: PFE), the fund’s top holding, won the approval of both the US and Canadian governments to consummate its $68 billion acquisition of Wyeth (NYSE: WYE). The combination should help Pfizer stem the massive revenue loss that will occur when its top-selling cholesterol drug Lipitor loses its patent protection in 2011.

Another major benefit for Pfizer will be the addition of Wyeth’s huge veterinary pharmaceutical business. Pfizer agreed to sell half the business to satisfy antitrust concerns, but the unit is still expected to add more than $500 million in annual revenue.

The fund also holds large positions in health insurers Humana (NYSE: HUM), WellCare Health Plans (NYSE: WCG) and UnitedHealth Group (NYSE: UNH).

Although insurers are perhaps the most at-risk segment in the industry, WellCare and Humana have a leg up in the potentially changing business environment: Their single largest customer is the federal government.

The reconciliation process is still ongoing, but a public option appears to be losing ground to the idea of an insurance exchange. In that event, even if insurers have less leeway to deny coverage, the inclusion of an individual mandate requiring most Americans to carry coverage should offset higher medical losses.

PRIMECAP Odyssey Growth (POGRX), which seeks companies with significant long-term growth upside that also happen to be undervalued, is also heavily invested in the health care industry. The segment accounts for more than 34 percent of net assets.

But its approach has led it in a different direction than Fairholme; it includes a few larger pharmaceutical names but focuses more on biotechs and device and instrument manufacturers.

Portfolio holdings include Conceptus (NSDQ: CPTS), which develops minimally invasive permanent birth control systems for women. This year the stock has returned nearly 30 percent for the fund. Conceptus would actually benefit from expanding insurance coverage because its market would be deeper.

Another major holding is Illumina (NSDQ: ILMN), an operator of testing facilities and a manufacturer of genetic analysis equipment and consumables used by a variety of drug manufacturers, medical schools and research organizations.

Illumina’s bread and butter are consumables, a $2 billion market with a double-digit growth rate. Once its low-cost equipment is installed, it’s essentially guaranteed a long-term customer relationship because test reagents and other one-time-use equipment must be repurchased.

Two very different investment approaches led these two managers to sink substantial amounts of money into health care. Over the long haul, investors will continue to profit from health care, regardless of which way the winds blow in Washington, DC.

If It Glitters

The US dollar is weakening because of seasonal factors and the long-term implications of the federal government’s massive spending habit. These factors have fueled fears of inflation, driving many investors into gold.

On September 8 the yellow metal broke $1,000 an ounce for the first time since March 2008, prompting analysts to wonder if it might establish a new record high.

Barrick Gold Corp (NYSE: ABX) sent a strong signal that it expects gold prices to continue to climb, offering $3.5 billion of equity at $36.95 a share in a bid to raise cash. The company plans to use the cash to pay off all of its fixed-price hedges within the next 12 months and exit about $1.5 billion of its floating spot-price hedging arrangements.

The Chinese have also entered the fray. State-owned Industrial & Commercial Bank of China announced the creation of a trading unit dedicated to precious metals, which many believe will act to facilitate the government’s gold purchases.

In the precious metals arena, although bullion fund SPDR Gold (NYSE: GLD) has been running like gangbusters, we still prefer Fidelity Select Gold (FSAGX ), a diversified fund that includes a mix of miners.

In a testament to the powers of asset allocation–a task at which manager Joseph Wickwire has proven particularly adept–the fund has outperformed both physical gold and its benchmark index over the past two weeks.

A more leveraged play on gold, the portfolio is made up primarily of miners, with just 7.7 percent of assets invested in bullion as of July 31.

Another recent tailwind for the fund has been the fact that Wickwire purchases shares in their home markets, with two-thirds of the portfolio in non-dollar denominated assets. Exposure to the Canadian dollar, which has appreciated more than 7 percent against the greenback since July, has been particularly beneficial.

Although the meteoric rise in gold prices has moderated in recent weeks, it appears to be more of a pause than a shifting trend. In fact, both the fundamental and technical views suggest that the odds of continued gains remain quite likely.

All in all, these are two long-term trends to which all investors should have exposure.