ETF Spotlight on Health Care Select Sector SPDR (XLV), part of a recurring series.
Assets: $2.3 billion
Objective
XLV seeks to match the returns of the Health Care Select Sector index.
How It Works
XLV holds 54 companies diversified across the spectrum of the health care sector, including health care equipment and supplies, providers and services, biotechnology and pharmaceuticals. It has an expense ratio of 0.21%. The fund can be a good way to diversify across the entire range of the sector instead of banking on one particular industry, especially as health care reform winds its way through Washington and the ultimate impact remains in question.
The Latest News
- The health care sector has been getting an increasing amount of attention since President Barack Obama declared reform one of the top priorities for his administration.
- Rising health care costs decrease the competitiveness of U.S. insurance companies, strain state and federal budgets and eat away at consumer wealth. The U.S. spends around $2.5 trillion on health care annually and is still behind other developed nations on many public health measures.
- Back in March, health care companies considered Obama’s overhaul a potential profit-killer and investors shared the same assumption as they dumped shares.
- This weekend, Obama closed the “doughnut hole” in Medicare Part D coverage, which will cut the costs of drugs for seniors. The Pharmaceutical Research and Manufacturers of America agreed to reduce its draw of revenues by $80 billion over 10 years and cut the cost of medicine in the program by up to 50%.
- XLV is down 3.8% year-to-date and up 2.4% in the last two weeks.
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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.