Five Health Care ETFs Your Broker Forget To Mention
Whether it has been Europe's epic battle with sovereign debt, intense monetary tightening in China and emerging markets or slack economic growth here in the U.S., investors are getting overwhelmed. Because of a confounding confluence of factors this year embracing boring stocks and the ETFs that hold them has become a fine idea.
Health care ETFs fit the bill and they have been stellar performers in 2011 as the “boring is beautiful” has been embraced by investors in a big way.
Boring can be beautiful and health ETFs look like they may just be in the middle innings of a prosperous run, but it pays to note this group is about more than just the Health Care Select Sector SPDR (NYSE: XLV). Here are five health care ETFs your broker probably forgot to mention.
1) iShares Dow Jones Medical Devices ETF (NYSE: IHI): We started mentioning IHI back in February when the ETF was laboring around $60. At the time, we felt as though the ETF wasn't getting much love. Today, it's hardly accurate to say IHI is undiscovered and it is flirting with $68, indicating our call in February was the right one.
Home to familiar names such as Medtronic (NYSE: MDT), Intuitive Surgical (Nasdaq: ISRG), and St. Jude Medical (NYSE: STJ), IHI will face some resistance at $69, but could see some fresh buying on breakout above that level.
2) First Trust Health Care AlphaDEX Fund (NYSE: FXH): FXH is dwarfed by XLV in terms of both assets and volume, but FXH has outperformed its more popular rival in the past six months. Did anyone mention that? Probably not. FXH is worth a look not only because of its performance, but also because of its diversity. The ETF, which is home to 76 stocks, isn't a pure pharma or device play. Health care services providers do dominate FXH at almost 38% of the ETF's weight, but biotech, pharma and health care equipment names all figure prominently in the ETF's mix.
3) Rydex S&P 500 Equal Weight Health Care ETF (NYSE: RYH): Think there isn't something to be said for the equal-weight ETF concept? Think again. XLV has returned more than 25% in the past year and that's nice, but RYH has done much better with a run of over 33%. Like FXH, RYH is diverse as services providers, equipment and pharma names all get double-digit weights and biotech isn't far behind.
4) PowerShares Dynamic Biotechnology & Genome Portfolio (NYSE: PBE): There's a fair amount of biotech ETFs out there and PBE seems to be one that investors sleep on. Why that is the case, we don't know. It should not be. Home to 30 stocks, PBE does a good job of mixing in lesser known names such as Alexion (Nasdaq: ALXN), the ETF's top holding, with more standard fare such as Biogen (Nasdaq: BIIB) and Amgen (Nasdaq: AMGN), just to name a few. Up almost 30% in the past year, PBE could be interesting above resistance at $22.50.
5) ProShares Ultra Health Care (NYSE: RXL): Yes, even boring sectors get leveraged ETFs. We're not endorsing RXL as a long-term holding, but short-term traders can give it a whirl to jazz up their health care returns. RXL is basically the double leveraged answer to the iShares Dow Jones U.S. Healthcare ETF (NYSE: IYH).
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