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Should You Invest in the Vanguard Health Care ETF (VHT)?

Sector ETF report for VHT

By
This story originally appeared on Zacks

Designed to provide broad exposure to the Healthcare - Broad segment of the equity market, the Vanguard Health Care ETF (VHT) is a passively managed exchange traded fund launched on 01/26/2004.

- Zacks

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.

Index Details

The fund is sponsored by Vanguard. It has amassed assets over $16.44 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. VHT seeks to match the performance of the MSCI US Investable Market Health Care 25/50 Index before fees and expenses.

The MSCI US Investable Market Health Care 25/50 Index is made up of stocks of U.S. companies within the health care sector.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.22%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Johnson & Johnson (JNJ) accounts for about 7.19% of total assets, followed by Unitedhealth Group Inc. (UNH) and Pfizer Inc. (PFE).

Performance and Risk

So far this year, VHT has added about 15.19%, and is up about 25.10% in the last one year (as of 10/22/2021). During this past 52-week period, the fund has traded between $198.15 and $265.84.

The ETF has a beta of 0.81 and standard deviation of 21.67% for the trailing three-year period, making it a medium risk choice in the space. With about 455 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Health Care ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VHT is a great option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

ARK Genomic Revolution ETF (ARKG) tracks N/A and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. ARK Genomic Revolution ETF has $7.15 billion in assets, Health Care Select Sector SPDR ETF has $30.41 billion. ARKG has an expense ratio of 0.75% and XLV charges 0.12%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Vanguard Health Care ETF (VHT): ETF Research Reports

 

UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

 

Johnson & Johnson (JNJ): Free Stock Analysis Report

 

Pfizer Inc. (PFE): Free Stock Analysis Report

 

Health Care Select Sector SPDR ETF (XLV): ETF Research Reports

 

ARK Genomic Revolution ETF (ARKG): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research