While equities roiled over the latest developments in the trade negotiations between the U.S. and China, the healthcare sector exchange traded funds were a stalwart bastion in the stormy markets.
“The old saying people would say [is]“don’t just stand there, do something.” When volatility picks up, you do just the opposite — “don’t just do something, stand there.” But, while you’re standing there, get a list of the stocks you like and the levels you like them at,” Matt Maley, equity strategist at Miller Tabak, told CNBC.
Tabak highlighted the relative stability in UnitedHealth (NYSE: UNH), the country’s largest publicly traded health insurer, during the volatile market conditions.
“It got hit before the rest of the market did when this ‘Medicare for All’ situation hit and then the stock has bounced back nicely here,” Maley said. “This week as the market has seen the biggest decline that it has all year, UnitedHealth has actually rallied 3%.”
ETF investors who are interested in the defensive nature of the healthcare industry can look to broad sector-specific ETFs plays to gain diversified exposure to this market segment.
For example, the iShares U.S. Healthcare Providers ETF (NYSEArca: IHF), which has a 22.6% tilt toward UNH, and iShares Evolved U.S. Healthcare Staples ETF (Cboe: IEHS), which holds 12.9% in UNH, have increased 1.1% and 0.1% over the past week, respectively. In comparison, the S&P 500 Index has declined 1.6% over the period.
IHF is a traditional index fund that targets U.S. equities in the healthcare providers sector. Specifically, the ETF provides exposure to U.S. companies from health insurance, diagnostics, and specialized treatment.
IEHS is an actively managed sector ETF powered by machine learning try to expand upon traditional sector classification systems. The fund take components from large-, mid- and small-cap segments and incorporate data analysis tools taken from artificial intelligence technology, including machine learning, natural language processing and clustering algorithms, among others. These artificial intelligence screens ensure the ETFs keep up with changing conditions and also seek out links between companies potentially operating in various sectors that have been overlooked.
For more information on the healthcare segment, visit our healthcare category.