Amid stellar performance and a spate of mergers and acquisitions activity, the healthcare sector is taking on a bigger role in the Direxion iBillionaire Index ETF (NYSEArca: IBLN).
“In the current low interest rate environment, some of the most attractive returns came from healthcare equities. The ongoing M&A trend, more drug approvals, and recent innovations benefited healthcare companies. The consolidation of the sector puts more pressure on companies to operate more efficiently. Billionaire investor Larry Robbins of Glenview Capital, believes that demographic trends will also contribute to the steady growth of the sector. Robbins is betting on the aging population in the U.S. and remains bullish on pharmaceuticals and hospitals,” according to a Direxion note.
Following its most recent rebalance, iBillionaire Inc.’s iBillionaire Index (BILLIONR), IBLN’s underlying benchmark, allocates 23.3% of its weight to healthcare stocks, tying the sector with technology as the index’s second largest sector weight. At 30%, consumer discretionary is the index’s largest sector weight.
IBLN has parted ways with Chesapeake Energy (NYSE: CHK), EMC (NYSE: EMC), Facebook (NasdaqGS: FB), PVH Corp. (NYSE: PVH) and Yahoo (NasdaqGS: YHOO). Those stocks combined for 16% of IBLN’s weight at the end of the first quarter, according to Direxion data.
Facebook’s stay in IBLN was short-lived as the stock entered the EF in the fourth quarter. [Billionaire Index ETF Adds Facebook, Dumps Netflix]
IBLN’s index index “is designed to track and measure the performance those who have, over time, reaped the biggest rewards on Wall Street: financial billionaires. The index monitors the portfolios of leading billionaire investors, such as Warren Buffett, Carl Icahn, Daniel Loeb, David Tepper and David Einhorn,” according to iBillionaire.
New additions to IBLN, include three healthcare names; Endo International (NasdaqGS: ENDP), Humana (NYSE: HUM) and McKesson (NYSE: MCK) as well as American Airlines (NasdaqGS: AAL), Applied Material (NasdaqGS: AMAT) and DirecTV (NasdaqGS: DTV). American joins rival Delta Airlines (NYSE: DAL) as IBLN’s only airline holdings.
“Consumer discretionary remains a billionaire high conviction sector, and the largest component of the Index. Despite a stronger U.S. dollar, consumer stocks performed well this year. The consumer discretionary sector of the S&P 500 returned around 6% YTD. Stocks such as GM and Priceline are among the billionaires’ favorite picks. Both companies show improvements in demand,” according to Direxion. [Consumer Discretionary ETFs Could Pick Up Steam]
Direxion iBillionaire Index ETF