The healthcare sector has been one of the mainstays for stable growth options in various market environments. Add some momentum to the mix to get the Invesco DWA Healthcare Momentum ETF (PTH).

Per the fund description, PTH seeks to track the investment results of the Dorsey Wright® Healthcare Technical Leaders Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index.

The underlying index is composed of at least 30 securities of companies in the healthcare sector that have powerful relative strength or “momentum” characteristics. Within the past year, the momentum-based fund is up 37%.

“This ETF is a component of the suite of ‘dynamic’ ETF products from PowerShares, seeking to replicate a benchmark that is constructed based on a proprietary screening methodology,” an ETF Database analysis noted. “While PTH is an index-based fund, the underlying index seeks to generate alpha by using quant-based filters to select individual stocks. For those who believe the methodology employed is capable of generating alpha over the long run, PTH might be an attractive way to access health care stocks.”

PTH Chart

An Increased Emphasis on Healthcare

Under U.S. president Joe Biden’s administration, healthcare should continue to prosper. With an aging population, more emphasis on healthcare for the elderly should provide for additional sector-related tailwinds.

“As president Biden moves toward the potential broadening of the Affordable Care Act (ACA) and the expansion of Medicare and Medicaid, we expect to see changes including the reinstatement of the individual mandate, a shift from Medicare eligibility from 65 years to 60 years old or lower, the expansion of access to public exchanges for more consumers, individualised coverage options and prescription drug pricing reform,” said Karin Landry of Spring Consulting Group in an interview with Financier Worldwide.

“In general, we foresee president Biden’s policies creating an increased emphasis on healthcare with consumers from private plans, such as employer-sponsored health plans, to public exchanges that have been expanded and improved,” Landry added. “Private options will then be less competitive and affordable for employers, who are turning to alternative options like unbundled health plans, referenced based pricing, Individual Coverage Health Reimbursement Arrangements (ICHRAs) and voluntary benefits at an increasing rate.”

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