Beyond XLV: Five Alternative Healthcare ETFs
Tuesday, May 18th, 2010Michael Johnston submits:
Healthcare was once considered to be one of the most stable sectors of the US economy, with demands for products and services fluctuating little during various phases of the economic cycle. But recent events in Washington have brought increased scrutiny and volatility, as the Obama administration’s healthcare reform has investors questioning the future of healthcare ETFs. Many of the long-term impacts of reform are still unknown. The bill will most certainly have an impact on healthcare insurance issuers; nearly 30 million new customers could translate into more revenue. But companies will likely also have to accept those who have pre-existing conditions, which could turn out to be a drag on profitability.
Other corners of the healthcare space – including pharmaceutical companies and device manufacturers – will see their business impacted in some way. The far-reaching reform has made healthcare ETFs a popular option for investors with an opinion on the ultimate beneficiaries. By far the largest and most heavily-traded healthcare ETF is the Health Care Select Sector SPDR (XLV), which has almost $2.5 billion in assets. XLV tracks the Health Care Select Sector Index, a benchmark that includes pharmaceutical companies, healthcare providers & services, healthcare equipment & supplies, biotechnology, life sciences tools and services, and healthcare technology. But there is a lot more to the health and biotech category than XLV. Below, we profile five alternatives to XLV – ETFs offering unique exposure to various corners of the healthcare industry.
