Healthcare sector exchange traded funds look more hale and hearty as increased healthcare spending helps lift second quarter growth.
Year-to-date, the Health Care Select Sector SPDR (NYSEArca: XLV) gained 17.1%, Vanguard Health Care ETF (NYSEArca: VHT) rose 16.8% and iShares U.S. Healthcare ETF (NYSEArca: IYH) increased 17.1%. The healthcare sector has outpaced the broader market, with the S&P 500 index up 9.5% so far this year. [Defensive Health Care ETFs Offer Growth, Too]
Healthcare and social assistance firm revenues rose 3% in the second quarter from the first three months of the year, with hospital revenue rising 2.8% and physician offices’ revenue jumping 4.1%, Wall Street Journal reports.
From the S&P 500 index, 54 healthcare companies posted aggregate revenue growth of 12% over the second quarter year-over-year, compared to a 7.5% sales increase for the first quarter.
“Health-care spending as a percentage of the economy continues to rise,” Stephen Stanley, chief economist at Pierpont Securities LLC, said in a Bloomberg article. As Affordable Care Act takes effect and the population ages, “everything points to continued increases.”
The higher-than-anticipated healthcare spending over the second quarter may have been attributed to the low-ball estimate extrapolated from weak spending in the first quarter due to harsh winter conditions keeping Americans from the doctor’s office.