(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 $47 million and average daily trading volume is around 33K shares. As of late October 2011 the annual dividend is negligible while the YTD return is over 5.35%.
Data as of October 2011
PTH Top Ten Holdings & Weightings
- Intuitive Surgical, Inc. (ISRG): 2.55%
- Humana (HUM): 2.53%
- Agilent Technologies Inc (A): 2.53%
- Eli Lilly and Company (LLY): 2.51%
- WellPoint Inc (WLP): 2.50%
- Aetna Inc (AET): 2.50%
- McKesson, Inc. (MCK): 2.50%
- Pfizer Inc (PFE): 2.49%
- CIGNA Corp (CI): 2.49%
- Baxter International Inc. (BAX): 2.49%
(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 $343M with average daily trading volume around 55K shares. As of late October 2011 the annual dividend was $.11 making the current yield roughly only.19% while the YTD return was 3.05%.
Data as of October 2011
IHI Top Ten Holdings & Weightings
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.
(iShares DJ U.S. Health Care Providers ETF) tracks the Dow Jones U.S. Select Healthcare providers Index which measures the health care provider subsector of the U.S. equity market. As such the index contains fewer holdings. The fund was launched in May 2006. The expense ratio is .48%. AUM equal $198 million with average daily trading volume over 124K shares. As of July 2011 the annual dividend yield is .24% and YTD return is nearly 5.20%.
Data as of October 2011
IHF Top Ten Holdings & Weightings
- Medtronic, Inc. (MDT): 10.21%
- Covidien, Ltd. (COV): 7.49%
- Thermo Fisher Scientific Inc (TMO): 7.22%
- Intuitive Surgical, Inc. (ISRG): 6.04%
- Stryker Corporation (SYK): 5.99%
- St Jude Medical, Inc. (STJ): 5.04%
- Zimmer Holdings Inc (ZMH): 4.93%
- Boston Scientific, Inc. (BSX): 4.49%
- Waters Corporation (WAT): 3.96%
- Varian Medical Systems, Inc. (VAR): 3.67%
(iShares S&P Global Health Care ETF) follows the S&P Global Health Care Index including a wide range of companies from biotech, manufacturing, medical devices and pharmaceuticals. The fund was launched in November 2001. The expense ratio is .48%. AUM equal $506 million with average daily trading volume around 92K shares. As of late October 2011 the annual dividend was $.1.20 making the current yield 2.20% with YTD return of 7.65%.
Data as of November 2011
IXJ Top Ten Holdings & Weightings
- UnitedHealth Group Inc (UNH): 14.04%
- WellPoint Inc (WLP): 8.55%
- Medco Health Solutions, Inc. (MHS): 6.73%
- Express Scripts (ESRX): 6.23%
- Aetna Inc (AET): 5.52%
- Humana (HUM): 5.16%
- CIGNA Corp (CI): 4.83%
- Laboratory Corporation of America Holdings (LH): 3.73%
- Quest Diagnostics Inc (DGX): 3.70%
- DaVita Inc (DVA): 2.88%
The Health Care sector has enjoyed a positive first half of 2011 despite so many uncertainties surrounding government health care changes and mandates. There is a lot to choose from in terms of indexes linked to ETFs. Some are passive and duplicative relatively. It's essential to remember it's really a game of battleship for sponsors seeking to be first to a sector space or just being competitive in the space. This is their business interest apart from your investment interest. You should always ignore their interests and align your choices with what serves your objectives best.
Investors should note that in a rising market particularly ETFs linked to enhanced issues will tend to outperform conventional index linked issues. I've not done enough analysis to determine their relative performance during down market periods.
New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned.
As stated with other sectors, remember ETF sponsors must issue and their interests aren't aligned with yours. They have a business interest and wish to have a competitive presence in any popular sector.
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The ETF Digest has no current position in the featured securities.
(Source for data is from ETF sponsors and various ETF data providers.)
- Johnson & Johnson (JNJ): 8.36%
- Novartis AG (NVSEF): 7.36%
- Pfizer Inc (PFE): 6.61%
- Roche Holding AG (RHHVF): 5.46%
- GlaxoSmithKline PLC (GLAXF): 5.05%
- Merck & Co Inc (MRK): 4.83%
- Abbott Laboratories (ABT): 3.81%
- Sanofi (SAN): 3.68%
- AstraZeneca PLC (AZN): 2.89%
- Bristol-Myers Squibb Company (BMY): 2.56%