Health Care Select Sector SPDR (NYSEArca: XLV) is trying to break resistance to a new lifetime high as investors bet an aging population and healthcare reform make the sector an attractive long-term portfolio holding.
The ETF’s top five stocks are Johnson & Johnson (NYSE: JNJ), Pfizer (NYSE: PFE), Merck (NYSE: MRK), Amgen (NasdaqGS: AMGN) and Gilead Sciences (NasdaqGS: GILD).
The fund gained about 17% in 2012 to edge out the S&P 500.
“Historically defensive and noncyclical, the health-care sector is seeing added growth from an aging America. Demand is relatively stable because people require treatment regardless of the economy, and baby boomers needing greater treatment make for a compelling secular-growth story,” Morningstar analyst Robert Goldsborough writes in a report on XLV.
“An aging population bodes well for the industry’s future prospects because the majority of people’s lifetime medical costs are spent in their final few years,” he added. “The health-care sector has hit a lull in recent years, as some key blockbuster drugs have lost exclusivity, prompting a blitz of competition from generic drug firms.”