We speak about put accumulation in the largest U.S. Health Care Equity based ETF, XLV (SPDR Health Care Select, Expense Ratio 0.15%) and the fund has been beat up this week while losing more than $650 million in assets via redemption in the trailing one month period.
This is not isolated to XLV however, as just yesterday we mentioned the recent carnage in specific Biotech Equity ETFs that has occurred (and once again in the month of April just like last year), and there has been immense selling pressure throughout both the Biotech and Health Care equity spaces.
In the broad “Health Care” category, XLV has a notable advantage as the largest fund in terms of asset size, with more than $13.6 billion in AUM, while the second largest fund is of course IBB (iShares NASDAQ Biotechnology, Expense Ratio 0.48%) with about $8.2 billion in AUM.
With the focus in this space lately, it makes sense to watch VHT (Vanguard Health Care, Expense Ratio 0.12%), FXH (First Trust Health Care AlphaDEX, Expense Ratio 0.66%), FBT (First Trust NYSE Arca Biotechnology, Expense Ratio 0.60%), and IYH (iShares U.S. Health Care, Expense Ratio 0.43%) as well, to name the largest funds in the space in terms of asset sizes.
What may not be evident to everyone is that there is clear overlap in terms of portfolio constitution and index membership in some of the more broad “Health Care” funds such as XLV, when compared to “Biotechnology specific” ETFs.
For example, the fourth largest holding in XLV is GILD (5.31%), a prominent “Biotech” name, and the sixth largest holding is AMGN (4.41%), which is almost a poster child for “Biotech,” given its long standing presence in the sector. Likewise, AMGN happens to be the second largest holding in IBB (7.97%) and GILD is the fourth largest holding there (7.45%).
Those whom are trading XLV as an ETF if not the options should also likely focus on CURE (Direxion Daily Healthcare Bull 3X, Expense Ratio 0.95%), RXL (ProShares Ultra Health Care, Expense Ratio 0.95%) and RXD (ProShares UltraShort Health Care, Expense Ratio 0.95%) since they are leveraged/inverse trackers in the space that traders can likely use adeptly for hedging and/or short term directional trading strategies.
Health Care Select Sector SPDR Fund
For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com
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