In addition to having decent pricing power, the healthcare sector has long been considered one of the most reliable defensive sectors, making it a strong way to augment a portfolio during recessionary periods.
The Invesco S&P 500® Equal Weight Health Care ETF (RYH), which provides exposure to the domestic healthcare industry, is a strong offering with a unique methodology. RHY follows the S&P 500 Health Care Index. However, each sub-industry component is given equal weight. A strategy like this might appeal to investors looking to avoid traditional indexing methodology which typically distributes holdings based on market cap.
The fund has returned 6.8% over one month, partially recouping earlier losses. The fund is still down 9.9% year to date, making now an ideal time to buy in at a discount. The fund has seen $59 million in net inflows year to date, according to VettaFi.
RYH is designed to offer more balanced exposure for the long-term investor since it has the added benefit of avoiding the potentially adverse impact of rallies or crashes in a specific sub-industry within healthcare.
The fund has exhibited a tilt toward low-volatility stocks, or companies whose shares have a history of lower standard deviation of returns. Such exposure tends to pay off most during periods of market stress.
Current holdings, which are equally weighted, include Gilead Sciences (GILD), Pfizer Inc. (PFE), Vertex Pharmaceuticals Incorporated (VRTX), Eli Lilly and Company (LLY), Catalent Inc. (CTLT), and Viatris Inc. (VTRS). The fund holds 65 securities as of August 12.
The fund has $966 million in assets under management and charges a 40 basis point expense ratio, offering a cost advantage over many other funds offering similar exposure.
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