Depends on how much you want to overweight and your sense of risk/reward.
I've had 2-5% in Fidelity Biotech over the last 15 years and more recently an add-on to Fidelity Select Health. I sold more than half of the former in the early 2000s when it shot to the moon, then dollar cost averaged in monthly (small amounts); sold 1/3 before the 2008 and dollar cost-averaged, etc. Now it's on a another moon shot. It's about 12% of total portfolio gains, many realized despite never being more than 3-4% of the portfolio.
Your mileage may vary, probably will, particularly after the gains of the last few years.
After going nowhere to negative for quite a few years (I think the 5 year returns in '09 were -5%), Select Health has been moving similarly markedly, over the last 3 years and 5 years (annual returns of 23-24%). The question for me in sectors like this is how to harvest gains (and limit losses), although it's not as acute a question as in individual stocks.
Originally Posted by Spanky
What's an appropriate allocation to health care sector (e.g, Vanguard Health Care fund) within the equity portion of a portfolio? I understand that sector bet may not be prudent, but the health care sector has been performing well and the decline (-21%) is less severe than that of the total market (-40%). It is true that the future may be significantly different will the past. Any thoughts or comments?