John Nyaradi: Health care was hot last week with Health Care Select Sector SPDR ETF (NYSEARCA: XLV) registering a 2.65% gain for the week and iShares Dow Jones Health Care Select Sector Index (NYSEARCA: IHF) jumping 3.5% from last week’s close.
That trend is likely to continue because in spite of a stagnant economy and busted housing industry, the US healthcare industry will have strong fundamentals behind it over the next twenty years.
With the baby-boomers retiring in droves, the healthcare industry is likely to experience America’s next large wave of capital growth, and so ETF investors have many opportunities to potentially reap these gains by deploying health care ETFs in their portfolios.
Investors can choose from more than twenty healthcare related ETFs which include regular ETFS, leveraged ETFs and even inverse ETFs which can make money even in down markets.
A widely held healthcare ETF is the Health Care Select Sector SPDR ETF (NYSEARCA: XLV) which tracks the Health Care Sector Select Index and includes holdings in Pfizer (NYSE:PFE), Merck (NYSE:MRK), Johnson & Johnson (NYSE:JNJ), and Abbot Laboratories (NYSE:ABT).
chart courtesy of www.stockcharts.com
Another widely held healthcare ETF is the iShares Dow Jones US Healthcare Providers Index Fund (NYSEARCA:IHF). This ETF tracks the Dow Jones Health Care Select Sector Index, and includes holdings in Unitedhealth Group, Wellpoint, and Medco Health Solutions.
For investors looking to either leverage the healthcare system or short the healthcare system via ETFs, ProShares offers two such ETFs for investors’ needs. The ProShares Ultra Health Care Fund (NYSEARCA:RXL) and the ProShares UltraShort Health Care Fund (NYSEARCA:RXD) offer investors opportunities to leverage an ETF or short the market. Each fund is leveraged 2X, so potential for enormous gains and losses is possible, however, investors must be aware of these risks before buying these funds.
Below is a list of ten most common Health Care ETFs for your reference:
- Health Care Select Sector SPDR (NYSEARCA: XLV)
- Vanguard Healthcare ETF (NYSEARCA: VHT)
- iShares Dow Jones US Healthcare ETF (NYSEARCA: IYH)
- First Trust Health Care AlphaDEX Fund (NYSEARCA: FXH)
- iShares Dow Jones US Healthcare Providers Fund (NYSEARCA: IHF)
- ProShares UltraShort Health Care Fund (NYSEARCA: RXD)
- ProShares Ultra Health Care Fund (NYSEARCA: RXL)
- iShares Dow Jones U.S. Medical Devices Index Fund (NYSEARCA: IHI)
- iShares S&P Global Healthcare Sector Index Fund (NYSEARCA: IXJ)
All in all, my view is that healthcare ETFs have a bright future ahead as the baby boom generation reaches retirement age and require more and more medical services. Healthcare is going to be a growth industry and ETF investors can likely have a nice ride to profits as this major demographic and economic wave unfolds over the next two decades.
Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
John Nyaradi is Publisher of Wall Street Sector Selector and Senior Vice President of Private Client Services for ProfitScore Capital Management, Inc. Get a free Special Report from Wall Street Sector Selector