As investors witness a market in turmoil, health care exchange traded funds (ETFs) seem to be gaining strength. The health care sector has been turned to in the past during tough economic times and it may almost be that time to consider these ETFs in your portfolio.
Jerry Slusiewicz for IndexUniverse explains that in a bear market, it is important to invest defensivly. And this seems to be very true right now. For example, he reports that the iShares Dow Jones U.S. Healthcare Index Fund (IYH) has recently shown improvement. Over the last three months, IYH has gained almost 3% compared to the S&P 500 which is down nearly 8% in that same period. And like this ETF, the Health Care Select Sector SPDR (XLV) has shown similar positive signs, despite the tough market conditions.
Besides the fact these ETFs have shown improvement over the past few months, it is a promising sector because people will remain to be concerned about their health regardless of inflationary pressures or real estate continuing to falter. This may be why this sector is leading others at the moment and is going through what Slusiewicz calls a “breakout.”
As U.S. investors see oil prices continuing their slide, this would surely provide the rest of the economy more opportunity to grow. However, it seems too early to tell if a longer-term uptrend in oil prices has halted. This would explain that any hesitation in buying health care ETFs would actually relate more to the overall market condition rather than the health care sector.
Some health care ETFs include:
- iShares Dow Jones U.S. Healthcare Index Fund (IYH): down 7.9% year-to-date; up 4.2% for the month
- Health Care Select SPDR (XLV): down 9.5% year-to-date; up 3.5% for the month
- Vanguard Health Care (VHT): down 8% year-to-date; up 4.5% for the month
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.