IHI has also seen plenty of mergers and acquisitions activity among its components in recent years, but that trend within the health care sector has come under scrutiny as the U.S. Treasury Department looks to crack down on U.S. firms acquiring rivals with foreign domiciles so that they can avoid paying U.S. taxes. More recently, inversions have occurred after large U.S. companies merged with smaller foreign firms. The U.S. company would reincorporate in a tax-friendlier country, like Ireland, while maintaining much of their core operations in the U.S. [Read More: Inversion Crackdown Affects Health Care ETFs]

“IHI is a targeted bet on a health care niche. It invests in 47 U.S. companies that manufacture and distribute medical devices. Edwards Lifesciences (EW) is a top-rated IBD stock within this industry group, based on measures of technical and fundamental health such as earnings and sales growth,” adds IBD.

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