The healthcare sector has always been seen as a safe investment, but given the way the pandemic has affected the industry, there may remain dynamic trading opportunities with the Direxion Daily Healthcare Bull 3X ETF (CURE).
The pandemic itself was already roiling the markets with volatility and 2021 was supposed to be the year of recovery. Now that the Delta variant of Covid-19 has taken hold, the roller-coaster-ride volatility is back once again.
CURE seeks daily investment results equal to 300% of the daily performance of the Health Care Select Sector Index. The fund achieves this exposure by investing at least 80% of its net assets in financial instruments, such as swap agreements, securities of the index, and ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or to ETFs that track the index.
The index includes domestic companies from the healthcare sector, which includes: pharmaceuticals; healthcare equipment and supplies; healthcare providers and services; biotechnology; life sciences tools and services; and more. These sub-industries have all been affected by the pandemic in some form or fashion, giving traders dynamic opportunities to play the market.
With that triple leverage, the fund has been a stellar performer in 2021, rising to a 56% gain. Of course with leverage comes great risk; CURE is only intended to be used by seasoned investors.
Tailwinds to Be Had after Q2 Earnings
Where does healthcare go from here? If second quarter earnings are any indication, there should be more upside ahead.
One of CURE’s holdings made out well in its second quarter earnings results—United Health, which comprises about 8% of the fund’s holdings. Hospitals around the world were caught up in the hustle and bustle of the pandemic, leading to record profits for the firm.
“The second quarter for Universal Health Services was so profitable that it returned $189 million in federal coronavirus bailout funds,” an Axios article explained. “But executives cautioned higher COVID cases may lead to labor shortages.”
As for CURE’s top holding, Johnson & Johnson, it’s had its fair share of fluctuations this year after federal health agencies called for a halt to its vaccine distribution. Since then, however, the stock has recovered, sitting at a 9% gain for the year.
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