The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) -- The weight of the health care sector in a given ETF can vary dramatically. In the
S&P 500 SPDR Trust
, health care accounts for about 12%. In contrast,
First Trust Dividend
commits roughly 30% to the segment.
Naturally, there are specific sector and sub-sector funds that provide 100% exposure. There's 100% health care for the broader
S&P 500 SPDR Select Health Care
. And for those who want to narrow in on a sub-segment like pharmaceuticals, they can get their prescription filled through a fund like
PowerShares Dynamic Pharmaceuticals Portfolio
Over the last 12 months, health care ETFs have been on a roll. And, in fact, I wondered if we might be looking at a set of circumstances in the financial markets where more exposure is better.
For instance, while the
is known for some of its biotech corporations, health care only comprises 10% of the market cap weight in
PowerShares Nasdaq 100
. How did XLV, the 100% health care proxy, stack up against the info-tech heavy QQQ? Similarly, how might
PowerShares Dynamic Large-Cap Value
-- a fund with a 20% health weight that tracks an unfollowed "dynamic" index -- rate against a global fund with 100% weight in the
iShares S&P Global Health Care Fund
Granted, I won't necessarily be drawing conclusions from "apples-to-apples" comparisons. More like . . . apples to oranges. On the other hand, we certainly can examine stock funds on one-year performance and these candidates are all large-cap stock funds that trade on a U.S. exchange. (In other words, apples and oranges are round fruits that grow on trees.)
At first blush, one might be quick to suggest that the more heath care exposure, the better the year-over-year performance. After all, the dividend fund with the higher health care weighting out-hustled the dividend fund with the lower health care weighting. Moreover, three of the "Top 5" had 100% health weights.
Then again, circumstances may more accurately reflect the fact that "pharma/biotech/drugs" has been one of the hottest sub-segments around. Absent the "meds," one finds that dividend funds outperformed the broader based SPDR
Select Health Care
. Furthermore, funds with far less health care exposure than the 20% in
PowerShares Large Cap Value
registered stronger percentage performances.
I'm not looking to make game-changing observations by checking in on different sector weights. That said, it's the
pharmaceutical and biotech ETFs
that have done most of the heavy lifting. What's more, if you dig even deeper, assets with relatively moderate risk and high yield -- dividends, REITs, partnerships, utilities -- have been the true superstars in the 11/8/10 to 11/7/11 period.
Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.