Investors are becoming well-acquainted with what has become an indomitable run for the healthcare sector, the third-largest sector allocation in the S&P 500.
Of the top 10 non-leveraged sector ETFs on a year-to-date basis, six are healthcare funds. Five non-leveraged healthcare ETFs are up at least 15% over the past 90 days. The Health Care Select Sector SPDR (NYSEArca: XLV) is continuing its outperformance of the broader market and is the top performer among the nine sector SPDR ETFs on a year-to-date basis after placing second last year. [Healthcare ETFs can Keep Soaring]
Up 8.3% this year, XLV has hauled in $1.35 billion in new assets, the best total among the nine sector SPDRs, but it is not just large-cap healthcare names that are outperforming.
“In the U.S., the healthcare sector significantly outperformed broad parent indices in the first quarter 2015, across capitalization ranges. On a total return basis, the S&P 500® Health Care sector index gained 6.5% in the first quarter, while the S&P 500 ended the quarter up 1%. The S&P SmallCap 600® Health Care sector index led the pack, ending the quarter up over 15%, while the S&P SmallCap 600 gained 4%,” according to a note by S&P Dow Jones Indices senior analyst Chris Bennett.
Indeed, small-cap healthcare stocks have delivered stellar returns again this year. For example, the PowerShares S&P SmallCap Health Care Portfolio (NasdaqGS: PSCH), the small-cap answer to XLV, is up 16.6%. PSCH was one of 33 ETFs to hit 52-week highs Friday.
What it lacks in pharmaceuticals and biotech exposure, PSCH makes up for with heavy weights to healthcare equipment manufacturers and services providers. Those sub-sectors combine for 65.3% of PSCH’s weight. That is nearly double the weight to large-cap equipment makers and services providers featured by XLV. [Small-Cap Sector ETF Star]
Global healthcare stocks have impressed as well. In the first quarter, the S&P Global BMI Index jumped 8.7% with equivalent healthcare indexes in Europe, Asia and India outperforming multi-sector benchmarks in those regions.
Chart Courtesy: S&P Dow Jones Indices
The $1.69 billion iShares Global Healthcare ETF (NYSEArca: IXJ) is higher by nearly 11% this year and has added $147 million in new assets. Though the U.S. accounts for nearly two-thirds of IXJ’s country weight, half of the ETF’s top 10 holdings are non-U.S. firms.
“These data also imply that the market believes the healthcare sector will continue to be prosperous. Flows into the space indicate confidence, while recent growth in biotechnology demonstrated that some past wounds have healed,” adds Bennett.
Health Care Select Sector SPDR
