Seventeen exchange-traded funds that invest in health care and biotechnology companies have outperformed the S&P 500, according to TheStreet.com Ratings' database, even as the industry faces threats of regulatory strangulation and quasi-nationalization.
The market-beating performances, over one, three and 12 months ended Jan. 31, include much of the campaign, election and inauguration of a president who vowed to keep health care costs in check, which could erode companies' profits.
There was a spirited rally that followed the exit of Tom Daschle as the health and human services secretary nominee. Stocks held by the funds could benefit from gridlock over the selection of a new candidate to head the HHS, especially one less committed than Daschle to stringent government control over the health care industry.
Three of the ETFs in the accompanying table posted gains during the brutal January market slide. Four on the list managed to stay above water during the latest three-month period, when the benchmark S&P 500 declined more than 13%.Over the most recent 12 months, HOLDRs Biotech (BBH) climbed 7.7%, while three health/biotech ETFs fell only by single digits. Typical of the ETFs in the table is the largest member of the group, the $2.4 billion Health Care Select SPDR (XLV), which has been around since 1998. Its top holdings include health/biotech icons such as Johnson & Johnson (JNJ), Merck (MRK), Abbott Labs (ABT) and Amgen (AMGN).