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Top 10 Health Care ETFs

IBB (iShares Nasdaq Biotech ETF) follows the NASDAQ Biotechnology Index which consists of biotech and pharmaceutical companies listed on the NASDAQ. The fund was launched in February 2005. The expense ratio is .48%. AUM equal $1.5 billion while average daily trading volume in near 500K shares. As of July 2011, the annual dividend is $2.04 making the current yield just shy of 2.00% with an YTD gain of 14.50%.

A very popular alternative choice is BBH (ML Biotech HOLDERS) which structured as a trust feature fixed holdings. The heavy weight of AMGN, GILD and BIIB together constitute nearly 90% of the holdings. This makes risks higher and rewards potentially greater. As such we would rather focus on the ETF segment.

Another alternative choice is XBI (SPDR Biotech ETF) which offers a more evenly balanced holding structure. The expense ratio is lower at .35%. The rate of return as of July 2011 is also superior at 17.30%.

FBT (First Trust Biotech ETF) follows the NYSE Arca Biotechnology Index. It has an equally weighted index but with only 20 constituents. It has a higher expense ratio of .60% and features as of July 2011 a return of 10.10%.

Lastly, PBE (PowerShares Dynamic Biotech & Genome ETF) follows the Dynamic Biotechnology & Genome Intellidex Index which another "enhanced" index using quantitative measures to outperform more staid indexes. The expense ratio is .60% and the YTD return as of July 2011 is 1.87%.

Both ProShares and Direxion Shares feature leveraged inverse and long ETFs with which to hedge or speculate that approximate trends in this ETF.

Data as of July 2011

IBB Top Ten Holdings & Weightings

  1. Amgen, Inc. (AMGN):  7.35%
  2. Celgene Corporation (CELG): 5.25%
  3. Teva Pharmaceutical Industries Ltd ADR (TEVA): 5.05%
  4. Gilead Sciences Inc (GILD): 4.87%
  5. Pharmasset, Inc. (VRUS): 4.67%
  6. Vertex Pharmaceuticals (VRTX): 4.41%
  7. Biogen Idec, Inc. (BIIB): 4.29%
  8. Alexion Pharmaceuticals, Inc. (ALXN): 3.89%
  9. Illumina, Inc. (ILMN):  3.62%
  10. Perrigo Company (PRGO): 3.44%

FXH (First Trust Health Care AlphaDEX ETF) follows the StrataQuant Health Care Index which is another "enhanced" index which more actively manages constituents via quantitative methodologies from the Russell 1000 Index. The fund was launched in May 2007. The expense ratio is .70%. AUM equal roughly $350 million and average daily trading volume is 146K shares. As of July 2011, the annual dividend is $.03 making the yield .10% and an YTD return of 15.80%

Enhanced indexes can, and have for the most part generally outperformed more staid indexes in rising markets. We haven't done enough research to determine their relative performance in down markets.

Data as of July 2011

FXH Top Ten Holdings & Weightings

  1. Regeneron Pharmaceuticals, Inc. (REGN):  2.99%
  2. Aetna, Inc. (AET): 2.62%
  3. Humana (HUM): 2.58%
  4. Amgen, Inc. (AMGN): 2.54%
  5. WellPoint, Inc. (WLP): 2.51%
  6. Forest Laboratories, Inc. (FRX): 2.50%
  7. Coventry Health Care, Inc. (CVH): 2.47%
  8. Eli Lilly and Company (LLY): 2.45%
  9. SXC Health Solutions Corporation (SXCI): 2.41%
  10. Health Management Associates, Inc. (HMA): 2.35%

 

PTH (PowerShares Dynamic Health Care ETF) follows the Dynamic Healthcare Sector Intellidex Index which is another "enhanced" index which uses quantitative analysis to select and rebalance portfolio constituents to achieve superior returns. The fund was launched in October 2006. The expense ratio is .60%. AUM equal $90 million and average daily trading volume is around 24K shares. As of July 2011 the annual dividend is negligible while the YTD return is over 18%.

Data as of July 2011

PTH Top Ten Holdings & Weightings

  1. Biogen Idec, Inc. (BIIB): 3.08%
  2. Humana (HUM): 2.84%
  3. Waters Corporation (WAT): 2.64%
  4. Cigna Corporation (CI): 2.62%
  5. Thermo Fisher Scientific, Inc. (TMO):  2.60%
  6. WellPoint, Inc. (WLP): 2.59%
  7. Aetna, Inc. (AET): 2.58%
  8. Amgen, Inc. (AMGN):  2.56%
  9. UnitedHealth Group Inc (UNH): 2.54%
  10. Forest Laboratories, Inc. (FRX): 2.49%

IHI (iShares U.S. Medical Devices ETF) follows the Dow Jones U.S. Select Medical Equipment Index which measures the entire spectrum of equipment in the U.S. equity market. The fund was launched in May 2006. The expense ratio is .48%. AUM equal $468M with average daily trading volume around 90K shares. As of July 2011 the annual dividend was $.03 making the current yield roughly only .05% while the YTD return was 13.50%.

Data as of July 2011

IHI Top Ten Holdings & Weightings

  1. Medtronic, Inc. (MDT): 11.20%
  2. Covidien, Ltd. (COV): 8.28%
  3. Thermo Fisher Scientific, Inc. (TMO):  8.05%
  4. Stryker Corporation (SYK): 6.41%
  5. Intuitive Surgical, Inc. (ISRG): 5.86%
  6. St Jude Medical, Inc. (STJ): 5.85%
  7. Zimmer Holdings, Inc. (ZMH): 5.00%
  8. Boston Scientific, Inc. (BSX): 4.58%
  9. Waters Corporation (WAT): 4.06%
  10. Varian Medical Systems, Inc. (VAR): 3.99%

A freshly launched alternative is XHE (SPDR S&P Health Care Equipment ETF) which was launched in January 2011. The expense ratio is lower at .35% and holdings seem similar although much more equally weighted than found in IHI.

 

 

Stock quotes in this article: XLV, VHT, IYH, XPH, IBB, FXH, PTH 

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