Investors looking to capitalize on the healthcare sector’s defensive and quality traits while contributing to the greater good have an appealing idea thanks to the IQ Healthy Hearts ETF (HART).
HART is one of the Dual Impact exchange traded funds from New York Life Investments (NYLIM). While many old guard healthcare ETFs have some environmental, social, and governance (ESG) properties, HART ratchets up that proposition because the ETF bolsters NYLIM’s support of the American Heart Association’s Social Impact Fund.
Another way of looking at HART is that it offers investors the benefits of traditional capitalism with the ability to make a positive impact in the world at large. Not many ETFs can credibly lay claim to that assertion.
Speaking of the standard reason investors invest — upside potential — HART might just check that box, too. That’s the case at a time when the sector is slumping, further boosting its value credibility.
“Then there’s Merck, which trades at a discount to its big pharma peers due to the coming expiration of its patent privileges for cancer drug Keytruda. But David Wainer writes that Merck is pursuing tried-and-tested ways to extend patent protection for the blockbuster by trying it out in new formulations,” reported Aaron Back for the Wall Street Journal.
Merck (NYSE:MRK), a member of the Dow Jones Industrial Average, is a top 10 holding in HART and accounts for 5% of the ETF’s roster.
“For instance, Merck is testing whether Keytruda could be delivered as a subcutaneous injection rather than intravenously, thereby extending its patent protection. If some of these shots work, shareholders will be relieved,” according to the Wall Street Journal.
HART is unique among healthcare ETFs for another reason: It’s not a dedicated healthcare ETF. That sector accounts for almost 70% of the fund’s weight, but HART features exposure to consumer discretionary, consumer staples, and technology stocks, among others. In fact, Apple (NASDAQ:AAPL) is HART’s largest holding at 5.6%.
Bottom line: HART has multiple positive avenues for setting itself apart from traditional healthcare ETFs. With valuations low and quality high in the sector, those are points for investors to consider.
For more news, information, and strategy, visit the Dual Impact Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.