According to Goldman Sachs, the rising number of coronavirus cases will limit growth in a third-quarter rebound per a CNBC report. This should continue to put healthcare-related exchange-traded funds (ETFs) in the forefront.
Goldman Sachs’ “economists now see third-quarter gross domestic product rising by 25% on an annualized basis. That’s down from the initial estimate of 33%, with the reduction due primarily to concerns that increasing virus cases in states such as Florida, Texas, and Arizona will slow the pace of reopening.”
“The sharp increase in confirmed coronavirus infections in the US has raised fears that the recovery might soon stall,” said Jan Hatzius, Goldman’s chief economist. “Although a significant part of the increase reflects higher testing volumes … a broader look at the CDC criteria for reopening shows that not only new cases but also positive test rates, the share of doctor visits for covid-like symptoms, and hospital capacity utilization have deteriorated meaningfully in the last few weeks.”
ETF investors have a plethora of options in healthcare—whether it’s a subcategory of health like technology or broad-based exposure.
Healthcare ETF Plays
Investors who want to take advantage of the continuing innovations in health care amid the coronavirus pandemic can look to funds like the Principal Healthcare Innovators Index ETF (BTEC). BTEC seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq Healthcare Innovators Index.
Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index at the time of purchase. The index uses a quantitative model designed to identify equity securities in the Nasdaq US Benchmark Index (including growth and value stock) that are small and medium-capitalization U.S. healthcare companies.
In terms of broad exposure to healthcare, investors can look at the Health Care Select Sector SPDR ETF (NYSEArca: XLV) and the Vanguard Health Care ETF (NYSEArca: VHT), which comprise two of the biggest in the sector.
For traders, they can opt for the Direxion Daily Healthcare Bull 3X ETF (NYSEArca: CURE). CURE seeks daily investment results equal to 300% of the daily performance of the Health Care Select Sector Index, which includes domestic companies from the healthcare sector, which includes the following industries: pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology.
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