ETF Chart of the Day: Happy About Health Care

It may have been a wild ride, but it seems that at least some embraced the spring weakness in Biotechs in order to take new positions in the largest ETF in the space, IBB (iShares NASDAQ Biotechnology, Expense Ratio 0.48%) as it has attracted more than $200 million in assets YTD as we mentioned here yesterday.

That said, we did mention interest in downside puts there recently and Secretary Yellen actually made specific comments this morning during her testimony about specific U.S. Equity sectors having potentially “stretched valuations”, and the comments seem to involve Biotechs as well as Social Media. Biotechs aside, a related sector that more generally of “Healthcare” should be examined here in earnings season as well.

IBB as we mentioned is now the second largest ETP in terms of AUM in the broadly categorized “Health & Biotech Equity” ETP space, with more than $5 billion in assets, but a familiar name, XLV (SPDR Health Care Select Sector, Expense Ratio 0.16%) reigns supreme with more than $9.7 billion in AUM currently.

The sector fund debuted way back in 1998, and has demonstrated an ability to attract new assets amid torrid performance in 2014 and in the trailing one and five year periods compared to the broad market S&P 500 Index. Once left for dead, the top components of XLV include some “old school Big Pharma” names, like top holding JNJ (12.70%), followed by PFE (8.13%), and MRK (7.25%).

There is also some newer blood in XLV with names like GILD (5.46%) having good representation, as the number four weighting in the fund, and other “Biotechs”, including BIIB and CELG are also among the top
holdings, coming in at #9 and #10 respectively.

It is no secret that we are pitted in corporate earnings season and many of the top holdings mentioned report in the near term if they have not already released quarterly results, like JNJ did for example this morning (stock is down >1.4% and has flirted with its 50 day MA already this morning).