The iShares U.S. Healthcare Providers ETF (IHF) is another leading segment of the healthcare sector this year as well. IHF has gained 13.57% so far in 2014 and just recently hit a new all-time high. This ETF tracks 49 stocks engaged in health insurance, diagnostics, and specialized treatment.
Companies in IHF such as UnitedHealth Group (UNH) and Wellpoint Inc (WLP) have continued to benefit from the halo effect of Obamacare along with a growing need for medical services here in the United States. IHF charges a modest 0.43% expense ratio and has over $500 million in total assets.
Historically, this fund has had less volatility than the market as a whole. According to the iShares website, IHF has a beta to the S&P 500 Index of just 0.65, which indicates smaller price fluctuations than a broad measure of stocks.
The Bottom Line
When you are researching which sector or ETF to purchase, make sure you pay close attention to the construction of the underlying index. That will have a significant impact on the performance of the fund through good times and bad. You should also note the expense ratio of the fund, as many ETFs have complementary portfolios with vast differences in annual fees.
In addition, it pays to know where the aggressive and conservative areas of each sector lie. In the case of healthcare, biotechnology is going to be characterized as a high beta industry, while healthcare providers will generally be lower in overall volatility.
This article is brought to you courtesy of David Fabian from FMD Capital Management.