As Obamacare Takes Hold, This ETF Looks Promising
October 6th 2013 at 4:47am by Tom Lydon
Much to the chagrin of some policymakers on Capitol Hill, the Patient Protection and Affordable Care Act, or Obamacare as it is widely known, is going to effect. Without commenting on the success of the legislation itself, it can be said Americans are at least curious. So curious in fact that higher-than-expected traffic led to technical glitches at healthcare.gov, the marketplace where prospective customers can compare various health insurance plans.
For investors, there are ETFs with which to profit from Obamacare’s potential success. One obvious candidate is the iShares U.S. Healthcare Providers ETF (NYSEArca: IHF). With the Affordable Care Act now the law of the land, millions of new clients are expected to flow into the health care sector. That portends potentially bright future outlooks for IHF constituents such as Dow component UnitedHealth (NYSE: UNH) and Express Scripts (NasdaqGS: ESRX). Those stocks combine for 24% of IHF’s weight. [An Obamacare ETF Winner]
Analysts see some health insurance providers as better-positioned than others to come out on top in the new health care marketplace. “While we would again acknowledge that price isn’t the only determinant, we do think it will be important, and believe that those plans at the lower price point will see the greatest exchange enrollment. That said, we believe Aetna and Humana, followed by WellPoint are positioned to capture the most exchange lives among the publicly traded managed-care organizations (MCOs) based on our analysis of the lowest-cost Bronze/Silver plans and subsidy eligible within respective regions,” said Credit Suisse in a research note posted on Barron’s.