Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

With Health Issues Dominating Headlines, 2 ETFs For Illness And Wellness

Published 30/08/2021, 10:41
Updated 02/09/2020, 07:05

"The global health industry was worth $8.45 trillion in 2018 and global healthcare could reach over $10 trillion by 2022," according to PolicyAdvice a US insurance specialist. And the US leads global spending with the World Bank estimating that it accounts for 16.89% of US gross domestic product (GDP) and over $10,00 per capita.

The coronavirus has been headline news since early 2020 and it has highlighted the importance of the healthcare industry across the globe. On Aug. 23, the US Food and Drug Administration (FDA) approved the first vaccine against COVID-19 which was developed jointly by Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) and "will now be marketed as Comirnaty."

On the same day, the Dow Jones Health Care Index hit an all-time high and the NASDAQ Biotechnology Index is also hovering close to record highs. Year-to-date (YTD), the indices are up 18.2% and 11.9%, respectively.

The pandemic has meant that biopharma, medical technology, telehealth and insurance companies are high on investors' agenda. We regularly cover exchange-traded funds (ETFs) in the sector that could appeal to a range of buy-and-hold investors.

For instance, we've previously discussed:

  • ALPS Medical Breakthroughs ETF (NYSE:SBIO) - down 8.8% YTD (covered here);
  • ARK Genomic Revolution ETF (NYSE:ARKG) - down 8.9% YTD (covered here);
  • ETFMG Treatments, Testing and Advancements ETF (NYSE:GERM) - up 42.0% YTD (covered here);
  • Health Care Select Sector SPDR® Fund (NYSE:XLV) - up 18.6 % YTD (covered here);
  • iShares Biotechnology ETF (NASDAQ:IBB) - up 13.4% YTD (covered here);
  • iShares US Healthcare Providers ETF (NYSE:IHF) - up 13.6% YTD (covered here);
  • iShares US Medical Devices ETF (NYSE:IHI) - up 18.8% YTD (covered here);
  • SPDR® S&P Biotech ETF (NYSE:XBI) - down 6.2% YTD (covered here).

Today's article introduces two other funds that deserve further due diligence:

1. Fidelity MSCI Health Care Index ETF

  • Current Price: $67.27
  • 52-week range: $50.23 - $67.94
  • Dividend yield: 1.18%
  • Expense ratio: 0.08% per year

The Fidelity® MSCI Health Care Index ETF (NYSE:FHLC) invests in 475 stocks across the broad US health care sector. The fund started trading in October 2013. FHLC Weekly

FHLC tracks the MSCI USA IMI Healthcare 25/50 Index. The top 10 names make up about 40% of net assets of $2.8 billion. Large-caps comprise almost three quarters of the fund, followed by mid-caps (17.38%).

In terms of sectors, we first see healthcare equipment (26.34%). Next in line are pharmaceuticals (23.99%), healthcare providers and services (18.59%) and biotechnology (18.51%) and others.

Leading holdings include Johnson & Johnson (NYSE:JNJ), UnitedHealth (NYSE:UNH), Pfizer (NYSE:PFE), Abbott Laboratories (NYSE:ABT),Thermo Fisher Scientific (NYSE:TMO) and AbbVie (NYSE:ABBV).

The fund returned 26% in the past year, and 16.5% so far in 2021. FHLC saw a record high on Aug. 23. Trailing P/E, P/B and P/S ratios stands at 27.92x, 5.20x and 2.32x, respectively.

Readers with a long-term investment horizon might consider buying this low-cost fund between $62 - $65. Many of the firms in FHLC are likely to deliver quarters of shareholder value thanks to high levels of health care spending.

2. iShares Genomics Immunology and Healthcare ETF

  • Current Price: $53.68
  • 52-week Range: $34.32 - $55.25
  • Dividend Yield: 0.16%
  • Expense Ratio: 0.47% per year

According to the National Genome Research Institute:

“An organism's complete set of DNA is called its genome… Genomics is the study of all of a person's genes (the genome)… Virtually every human ailment has some basis in our genes.”

Recent metrics highlight: “the global genomics market size was valued at $20.1 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 15.35% from 2021 to 2028.”

Therefore, we can expect Wall Street to pay increasing attention to companies in the sector. Our second fund, the iShares Genomics Immunology and Healthcare ETF (NYSE:IDNA), gives exposure to healthcare companies that mainly focus on genomics and immunology, or “the study of the immune system [which] protects us from infection through various lines of defence.”

IDNA Weekly

IDNA, which has 48 holdings, tracks NYSE FactSet Global Genomics and Immuno Biopharma Index. The fund started trading in June 2019. The leading 10 names make up about 47% of net assets of $348 million.

Among the top names in the roster are Moderna (NASDAQ:MRNA) and BioNTech, which have become household names with their vaccines against Covid-19; genome editing group Intellia Therapeutics (NASDAQ:NTLA); and global healthcare giants Merck (NYSE:MRK) and Regeneron Pharmaceuticals (NASDAQ:REGN).

The fund returned 43.8% in the past 12 months and 16.9% YTD. IDNA hit a record high on Aug. 10. Trailing P/E and P/B ratios are 32.07x and 5.12x. Short-term profit-taking could push the ETF toward $50.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.