“Because the index is rebalanced quarterly, it is being refreshed with companies that have strong fundamental business characteristics. FXH currently has nearly $2 billion invested in 76 companies. One of the benefits of this strategy is that you get a broader subset of healthcare stocks that include more small and mid-cap companies as opposed to just large-cap names,” according to FMD Capital.
The near-term risk to FXH is its 32.2% weight to health care providers and services names, the sub-sector that looks most vulnerable right now in otherwise sturdy group. Pharmaceuticals, biotech and medical device names combine for 59% of FXH’s weight. [Obamacare ETF Could be in Trouble]
The almost $1.9 billion ETF is home to 74 stocks, none of which account for more than 3.1% of the fund’s weight. In a departure from the usual lineup of a cap-weighted health care ETF, just one old school pharmaceuticals company, Eli Lilly (NYSE: LLY), appears in FXH’s top-10 lineup.
First Trust Health Care AlphaDEX Fund
