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Health Care ETFs Drop on Profit Concerns

Shares of Johnson & Johnson, Pfizer and Biogen dropped, dragging down health care ETFs.
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TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.


season looks more like flu season as sneezing health care


sickened the performance of

exchange-traded funds.

During the five trading days that ended Thursday, the 79 health care ETFs we track lost 2.9%, on average. The only exception was the

ProShares UltraShort Health Care Fund


, which sells the sector short to generate an inverse performance. The S&P 500 Index was little-changed during the week.

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The worst-performing health care


was the

Rydex 2X S&P Select Sector Health Care ETF


, which dropped 6.8%. The fund's two largest holdings

Johnson & Johnson





slipped 1.5% and 4.5%, respectively.

One of the fund's biggest losers was

Thermo Fisher Scientific


, which gave up 13%. The company's first-quarter earnings fell 49% from a year ago, ending a nine-year streak of profit growth. Thermo Fisher also cut its 2009 earnings outlook.

Another holding,

Biogen Idec


, lost 11% over concerns that its multiple sclerosis drug Tysabri might be linked to a potentially fatal brain infection. The company recently confirmed that a sixth patient contracted the disease since the drug returned to the market in July 2006. The disclosure casts doubt over future sales of Tysabri and raises legal questions.


ProShares Ultra Health Care Fund


and the

ProFunds Health Care UltraSector ProFund


had the second- and third-biggest declines of the group. Both portfolios aim to track the daily performance of the Dow Jones U.S. Health Care Index with 200% and 150% leverage, respectively.

The worst-performing members of Dow Jones's health care index include

Parexel International


, down 30%;

Pharmaceutical Product Development


, down 21%; and

Myriad Genetics


down 16%.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.