Don't Overlook the Contributions of Healthcare ETFs

With U.S. stocks continuing to grind higher, technology and Internet names continue grabbing plenty of attention, but investors should overlook the contributions of the healthcare sector. The Health Care Select Sector SPDR (NYSEArca: XLV), the largest healthcare exchange traded fund, is up more than 14% year-to-date.

Healthcare’s rally has it sitting slightly ahead of financial services for the second-largest sector allocation in the S&P 500. The performance of XLV and rival healthcare efforts is undoubtedly impressive in the face of political efforts to repeal the Affordable Care Act (ACA), also known as Obamacare.

Hospital stocks were seen as big winners under Obamacare because with more Americans having access to health insurance, hospital operators would be able to be compensated for more procedures and services while providing fewer services for free.

Additionally, the actuaries calculated that around 8.4 million Americans became insured in 2014 and noted their increased use of medical services. The number of people on Medicaid is projected to increase to 78.1 million by 2024, outstripping Medicare, which is expected to have 70.3 million enrolled.