Healthcare ETFs Live Up to Defensive Reputation | ETF Trends

Exchange traded funds tracking U.S. healthcare stocks have justified their reputation as defensive sector plays in an uncertain economic environment this year.

Health Care Select Sector SPDR Fund (NYSEArca: XLV) is up 4.8% year to date, compared with a 4.2% loss for the S&P 500, according to investment researcher Morningstar. [ETF Chart of the Day: Healthcare]

“For investors looking for exposure to the healthcare sector, we view ETFs as an attractive investment option,” says Standard & Poor’s equity analyst Jeffrey Loo. [ETF Spotlight: Health Care]

“Overall, we believe healthcare valuations remain attractive as several sub-industries, such as pharmaceuticals and biotechnology, are trading well below their historical levels,” he wrote in a recent sector report. “We believe balance sheets are solid, with large cash balances driving higher dividend payments and even resulting in Amgen (NasdaqGS: AMGN) being the first biotechnology firm to pay a dividend. [ETF Flows Suggest Defensive Sector Rotation]

The healthcare sector represents about 12% of the S&P 500. The industry has been outperforming this year but also presents unique risks.