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Should You Invest in the Fidelity MSCI Health Care Index ETF (FHLC)?

Sector ETF report for FHLC

By
This story originally appeared on Zacks

Looking for broad exposure to the Healthcare - Broad segment of the equity market? You should consider the Fidelity MSCI Health Care Index ETF (FHLC), a passively managed exchange traded fund launched on 10/21/2013.

- Zacks

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many 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 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $2.96 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. FHLC seeks to match the performance of the MSCI USA IMI Health Care Index before fees and expenses.

MSCI USA IMI Health Care Index represents the performance of the health care sector in the U.S. equity market.

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 0.08%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.21%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that 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 Common Stock Usd1.0 (JNJ) accounts for about 6.94% of total assets, followed by Unitedhealth Group Inc Common Stock Usd.01 (UNH) and Thermo Fisher Scientific Inc Common Stock Usd1.0 (TMO).

The top 10 holdings account for about 41.75% of total assets under management.

Performance and Risk

The ETF has gained about 17.68% so far this year and was up about 22.83% in the last one year (as of 11/09/2021). In that past 52-week period, it has traded between $54.78 and $68.47.

The ETF has a beta of 0.78 and standard deviation of 21.16% for the trailing three-year period, making it a medium risk choice in the space. With about 479 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Health Care Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FHLC is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.80 billion in assets, Health Care Select Sector SPDR ETF has $32.57 billion. VHT has an expense ratio of 0.10% 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.



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Fidelity MSCI Health Care Index ETF (FHLC): ETF Research Reports

 

UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

 

Johnson & Johnson (JNJ): Free Stock Analysis Report

 

Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report

 

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

 

Vanguard Health Care ETF (VHT): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research