Looking for broad exposure to the Healthcare – Broad segment of the equity market? You should consider the Vanguard Health Care ETF (VHT), a passively managed exchange traded fund launched on 01/26/2004.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
The fund is sponsored by Vanguard. It has amassed assets over $15.67 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare – Broad segment of the equity market. VHT seeks to match the performance of the MSCI US Investable Market Health Care 25/50 Index before fees and expenses.
The MSCI US Investable Market Health Care 25/50 Index is made up of stocks of U.S. companies within the health care sector.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.34%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector–about 99.90% of the portfolio.
Looking at individual holdings, Johnson & Johnson (JNJ) accounts for about 7.77% of total assets, followed by Unitedhealth Group Inc. (UNH) and Pfizer Inc. (PFE).
Performance and Risk
The ETF has lost about -9.17% and is down about -2% so far this year and in the past one year (as of 06/28/2022), respectively. VHT has traded between $219.51 and $267.51 during this last 52-week period.
The ETF has a beta of 0.81 and standard deviation of 21.79% for the trailing three-year period, making it a medium risk choice in the space. With about 443 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Health Care ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VHT is an excellent option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares Global Healthcare ETF (IXJ) tracks S&P Global 1200 Healthcare Sector Index and the Health Care Select Sector SPDR ETF (XLV) tracks…
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