Last July, when Federal Reserve Chair Janet Yellen spurred a sell-off in healthcare stocks by saying that valuations in shares of biotech companies looked "stretched," portfolio manager Graham Tanaka saw an opportunity.

After a year-long buying spree, he now has more than a quarter of his $17 million Tanaka Growth fund portfolio in healthcare companies such as Gilead Sciences Inc, up from just 5 percent at the start of last year.

That bet is paying off: his fund is beating the S&P 500 by about 13 percentage points since the start of the year, putting Tanaka in the top 1 percent of equity fund managers tracked by Morningstar. Even with his big bet on healthcare, he's planning on adding more.

"With aging demographics in the US and the developed world, healthcare needs are going to grow dramatically faster than GDP," Tanaka said.

In the eleven months since Yellen's warning, other fund managers have benefitted by shaking off concerns about high valuations and increasing their holdings of healthcare companies. The average U.S. large cap equity fund run by a stockpicker now holds 15.8 percent of its portfolio in healthcare stocks, a position higher than any of the last 3 years, according to Lipper data.

With a 10 percent rally in the sector so far this year, that outsized bet on healthcare is helping fund managers post their best performance relative to the S&P 500 since 2007, the year before the financial crisis. Should the rally in healthcare continue, funds may finally be able to turn around a six-year skid in which stockpickers have struggled to outperform benchmarks.