Health Care ETFs Remain Strong

However, XLV’s fortitude in the face of adversity is not solely attributable to the pharma sub-sector. Biotechnology stocks, four of which are found in XLV’s top-10 holdings, have again been stellar performers. In a sign of just how strong biotech ETFs have been this year, the two “worst” of the five major biotech ETFs still have double-digit year-to-date gains. The other three rank among the year’s 10 best non-leveraged ETFs. [Big Gains Ahead for This Biotech ETF]

Another contributor to the health care sector’s upside has been the equipment and devices sub-industry. Heading into the start of trading Friday, the iShares U.S. Medical Devices ETF (NYSEArca: IHI) was up more than 2% this year.

Strength (or weakness) in the biotech and medical devices sub-sectors serves as a reminder about XLV’s composition. Yes, J&J, Pfizer and Merck jump off the screen as dominating this ETF. However, bioech, equipment and life sciences tools makers combine for nearly 40% of the fund’s weight. That says XLV is arguably more of a risk on play than its name implies and it is not a bad thing that XLV is again exhibiting leadership traits in 2014.

Chart Courtesy: State Street Global Advisors