Although U.S. stocks surged last week, the number of exchange traded funds making new all-time highs late in the week was small.
Last Thursday, fewer than 10 ETFs made new all-time highs and that group was comprised almost exclusively of biotechnology ETFs. Last Friday, 14 ETFs hit all-time highs with health care looming large once again as nine of the new high ETFs hailed from that sector, including five biotech funds. [New Highs for Biotech ETFs]
To its credit, the Guggenheim S&P Equal Weight Healthcare ETF (NYSEArca: RYH) was one of the other health care ETFs to notch a fresh record high, accomplishing that feat even with an underweight allocation to biotech stocks.
RYH has a 13.7% weight to biotech, making the industry the ETF’s fourth-largest sector weight. That compares with a 21.2% biotech weight for the Health Care Select Sector SPDR (NYSEArca: XLV) and a 21.8% biotech allocation for the Fist Trust Health Care AlphaDEX Fund (NYSEArca: FXH). Biotech is the second-largest industry weight in both XLV and FXH.
While RYH may appear light on biotech names relative to rival health care ETFs, the equal-weight offering bolsters exposure to health care equipment, providers and services names. The ETF’s weight to health care services providers is almost 26%, about 1,000 basis points above XLV’s weight to that group, and enough to give RYH healthy leverage to sector upside created by Obamacare. [Equal Weight Works With Health Care ETFs]
With the health care providers sub-industry entering its seasonally strong period, it is worth noting RYH’s weight to that group is nearly 27%, or almost 1,100 basis points higher than XLV’s allocation to that industry. [Check in With This Health Care ETF]
Although RYH is lighter on blue chip pharma names compared to its cap-weighted counterparts, the ETF does not short change investors when it comes to high-quality firms. The ETF is home to several companies with decades-long dividend increase streaks such as Johnson & Johnson (NYSE: JNJ) and Abbott Labs (NYSE: ABT).
Additionally, a substantial percentage of RYH’s holdings have been rumored to be takeover targets, a trait found with more than a few health care ETFs these days. Nearly a third of RYH’s 55 holdings have at some point been rumored to be takeover targets, are in the process of being acquire or, in the case o Allergan (NYSE: AGN), warding off a hostile takeover.
Investors like RYH’s story. When we last highlighted the ETF less than two months ago, it had $321.6 million in assets under management. That number is now above $360 million.
Guggenheim S&P Equal Weight Healthcare ETF
