Should You Invest in the iShares U.S. Healthcare ETF (IYH)?
Sector ETF report for IYH
If you're interested in broad exposure to the Healthcare - Broad segment of the equity market, look no further than the iShares U.S. Healthcare ETF (IYH), a passively managed exchange traded fund launched on 06/12/2000.
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.
Investor-friendly, sector ETFs provide many options 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 11, placing it in bottom 31%.
The fund is sponsored by Blackrock. It has amassed assets over $3.29 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. IYH seeks to match the performance of the Dow Jones U.S. Health Care Index before fees and expenses.
The Russell 1000 Health Care RIC 22.5/45 Capped Gross Index measures the performance of the healthcare sector of the U.S. equity market.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.94%.
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 (JNJ) accounts for about 7.91% of total assets, followed by Unitedhealth Group Inc (UNH) and Thermo Fisher Scientific Inc (TMO).
The top 10 holdings account for about 47.26% of total assets under management.
Performance and Risk
The ETF has gained about 23.58% and is up roughly 24.44% so far this year and in the past one year (as of 12/29/2021), respectively. IYH has traded between $239.92 and $300.32 during this last 52-week period.
The ETF has a beta of 0.77 and standard deviation of 20.51% for the trailing three-year period, making it a medium risk choice in the space. With about 120 holdings, it effectively diversifies company-specific risk.
IShares U.S. Healthcare 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, IYH 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.
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 $17.45 billion in assets, Health Care Select Sector SPDR ETF has $35.64 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.
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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iShares U.S. Healthcare ETF (IYH): 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
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