Healthcare exchange traded funds have been the strongest sector performers so far this year with one ETF that invests in healthcare providers rallying 20%.
“Among the top year-to-date ETF performers, we see a heavy concentration in health care, with 14 of the 16 strongest returns coming from ETFs focusing on either the overall sector or a portion of the health care area,” says Thomas Graves, equity analyst at Standard & Poor’s Equity Research.
Health Care Select Sector SPDR Fund (NYSEArca: XLV) is the largest sector ETF with over $4 billion in assets. It was up 12.7% year to date as of June 28, compared with a 4.1% gain for the S&P 500, according to Morningstar. The iShares Dow Jones US Healthcare Provider (NYSEArca: IHF) posted a 20.7% rise.
Jeffrey Loo, S&P Equity Research’s head of healthcare coverage, partially attributes the U.S. sector’s relatively strong year-to-date returns through late June to “a rebound from underperformance in 2010, when valuations were hurt by uncertainty related to health care reform.”