Equal-Weight Strategy ETF Outpaces S&P 500 Health Care Index

Healthcare is back in the forefront in the capital markets, and in the case of exchange traded fund (ETF) offerings from Invesco, one small-cap fund is outpacing its large-cap brethren.

The Omicron variant spurred a move into value equities, and one area that’s never in a shortage of value-oriented plays is the healthcare sector. That’s especially been the case earlier this year during the global vaccine roll-out and again with the latest COVID-19 variant.

“As the COVID-19 pandemic recedes, routine doctor and hospital visits, along with deferred medical procedures such as cataract surgery and heart valve replacements, are returning to normal,” says Kiplinger. “The pandemic has been a global tragedy, but if there is one silver lining it is that the miraculous development of effective COVID-19 vaccines in less than a year is helping to usher in a golden age for the pharmaceutical and health sciences industries.”

“We’re seeing a revolution today in vaccine development,” says Andy Acker, manager of Janus Henderson Global Life Sciences.

Investors looking for a strong performer that can withstand volatility may want to consider the Invesco S&P 500 Equal Weight Health Care ETF (RYH). Over a three-year period, the fund outperforms the S&P 500 Health Care sector, which speaks to the effectiveness of RYH using an equal-weight strategy to minimize concentration risk.

RYH seeks to track the investment results of the S&P 500® Equal Weight Health Care Index. The underlying index is composed of all of the components of the S&P 500® Health Care Index, which is an index that contains the common stocks of all companies included in the S&P 500® Index that are classified as members of the healthcare sector.

RYH Chart

A Small-Cap Option

For growth opportunities in the healthcare sector, there’s the Invesco S&P SmallCap Health Care ETF (PSCH) to consider. The fund seeks to track the investment results of the S&P SmallCap 600® Capped Health Care Index. Strictly in accordance with its guidelines and mandated procedures, S&P Dow Jones Indices, LLC compiles, maintains, and calculates the index, which is designed to measure the performance of securities of small-capitalization U.S. companies in the healthcare sector, as defined by the Global Industry Classification Standard.

Small-cap strength exhibited itself in the beginning of 2021, where PSCH outperformed RYH. It’s a reminder to investors that when momentum is one the side of small-cap strength, it can propel opportunities for higher gains and vice versa when markets falter.

RYH Chart

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