Don't Overlook the Contributions of Healthcare ETFs

“The math matters. Technology stocks, the market’s darlings in 2017, are less fearsome when mega-cap companies such as Apple Inc. are treated equally with others. Versions of the S&P 500 Information Technology Index that strip out market-cap bias show the biggest winners in this year’s market are health-care stocks. “We doubt many realize that equal-weight health care is outperforming tech,” Chris Verrone, head of technical analysis at Strategas Research Partners wrote in a note, reports Bloomberg.

Some other math matters as well. That being the more than $1.3 billion in new money hauled this year by XLV. That is good for one of the more impressive totals among all sector ETFs and it proves the point investors are bullish on healthcare.

Industry observers argue that medical technology companies can tap into increased healthcare spending among emerging economies while the U.S. market has matured and could experience slower growth. Looking ahead, in the years through 2024, spending growth is projected to average 5.8% and peak at 6.3% in 2020.

XLV allocates about two-thirds of its combined weight to pharmaceuticals and biotechnology stocks. The ETF holds 63 stocks with a weighted average market value of $121.5 billion.

For more information on the healthcare sector, visit our healthcare category.