Healthcare ETFs can Work Even When Interest Rates Rise

“In fact, health care is the best performing sector this year despite higher interest rates. Valuations may appear stretched on the surface, but this assessment needs to be balanced against relative strong profit growth and better earnings momentum,” notes BlackRock. [Target Financial, Healthcare ETFs]

An added bonus is that many large-cap biotechnology and pharmaceuticals names are cash rich. For example, Pfizer (NYSE: PFE), a top three holding in both IHE and IYH, had one of the five largest cash stockpiles among U.S. companies at the end of 2014.

Last week, the Supreme Court has confirmed the legality of the Affordable Care Act, commonly known as Obamacare with six justices ruling to uphold the sweeping healthcare legislation and three dissenting.

The news was a boon for the iShares U.S. Healthcare Providers ETF (NYSEArca: IHF), one this year’s top 10 sector ETFs and the epicenter of an expected wave of industry consolidation among healthcare providers. [M&A Activity Lifts This Healthcare ETF]

iShares U.S. Healthcare ETF