Historically, the healthcare sector has tended to outperform the broader market during recessionary periods, making now an ideal time to allocate to a well-diversified healthcare ETF.
Investors looking to gain access to the lucrative industry should consider the Invesco S&P 500® Equal Weight Health Care ETF (RYH), which offers exposure to the domestic healthcare industry.
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, according to VettaFi.
By employing an equal-weight methodology, 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.
This strategy skews toward smaller, deeper value companies compared with its average peer in the Health Morningstar Category. Analyzing additional factors, this strategy 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, according to Morningstar.
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, according to VettaFi.
The fund has $943 million in assets under management and charges a 40 basis point expense ratio, offering a cost advantage over many other funds offering similar exposure.
The fund has returned 3.79% over a one-month period and has a three-month return of 5.82% as of August 11, according to VettaFi.
For more news, information, and strategy, visit the Portfolio Strategies Channel.