While healthcare stocks may not always seem the most enticing, they’ve quietly surged over the last month. The active healthcare tech ETF, FMED, which focuses on industry disruptors, saw its June performance significantly leapfrog its overall YTD numbers. What’s driving this sudden spike, and can the fund play a meaningful role in portfolios for the second half of the year?
Key Takeaways:
- The active healthcare stocks ETF, FMED, has returned 20.4% over the last month following its major milestone.
- Last month, FMED hit its key three-year ETF milestone, a traditionally important point for ETFs.
- This milestone coincides with a notable performance spike that outpaces its category average, according to ETF Database data.
The Fidelity Disruptive Medicine ETF (FMED) charges a 50 basis point fee to actively invest in disruptive healthcare stocks. Hitting its three-year milestone last month may be helping to boost the fund and get it in front of more investors. Many brokerages require a three-year track record before offering a fund, and FMED can now tout strong performance data to mark that milestone.
The strategy returned 20.4% over the last month, comfortably beating the ETF Database health and biotech equities category average of 13%. This rally marks a significant turnaround for FMED. It previously trailed its peers with a 9.3% YTD return compared to the category’s 14.1% average at that time.
FMED looks for long-term capital appreciation by leaning into disruptive technologies in healthcare. Its managers seek out firms that meet both growth and value standards. More specifically, the strategy focuses on innovators in genomics, immunotherapy, robotic surgery, and advanced diagnostics. By applying rigorous fundamental analysis, FMED identifies the strongest contenders in these fields.
See more: This Elevated International ETF Looks Compelling Right Now
What, then, might investors expect from the fund in the second half of the year? Whether it can build on June’s momentum largely depends on the interest rate outlook. While a rate hike could slow rising healthcare stocks, a rate cut would provide a clear tailwind. But even if rates simply stay the course, drivers like AI could continue to boost healthcare tech. Taken together, FMED represents an intriguing thematic offering for investors to consider.
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Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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