Health Insurance

Why Did Vanguard Healthcare Fund Drop

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 8 minute read

The effects of technological progress can be seen wherever. Thanks to technical progress, the healthcare industry is undergoing a period of profound upheaval. Some of the world’s most serious medical problems are being easily solved by cutting-edge technology. 

Within a year of the emergence of the new coronavirus, vaccinations had been developed and made available, proving that the healthcare sector is progressing.

The healthcare sector is, without a doubt, a huge market. Investments in a wide range of healthcare equities and bonds that were preceded by thorough research were successful. 

But how can you go about investing in your own health if you lack the knowledge or resources to do so? There is a solution to this problem in the form of healthcare ETFs.

Outstanding Health Care ETFs

Exchange-traded funds (ETFs) in the healthcare industry are pools of capital from numerous investors that all contribute to the fund with the intention of purchasing companies in the healthcare industry. 

Some of these funds have a broad healthcare emphasis, investing in a variety of healthcare-related fields. While some examine the industry as a whole, others examine specific sectors like hospital networks, insurance providers, or medical equipment manufacturers.

It’s important to do your research before committing to an ETF, as not all investment vehicles are made equal. Returns on investment will also vary greatly from one fund to the next, and some will have larger fees than others.

It’s not always easy to decide whether exchange-traded funds (ETFs) are the best bets for your portfolio. If you’re looking for the best solutions available right now, consider the following:

1. Vanguard Health Care Index Fund ETF (VHT)

  • Expense Ratio: 0.10%
  • One-Year Return: 29.92%
  • Five-Year Annualized Return: 15.33%
  • Dividend Yield: 1.14%
  • Morningstar Rating: 4 out of 5 stars
  • Largest Holdings: The top holdings in the VHT portfolio include Johnson & Johnson (JNJ), UnitedHealth Group (UHC), Pfizer (PFE), Abbott Laboratories (ABT), and AbbVie (ABBV).
  • Years Up Since Inception: 14 out of 16

With a stellar reputation on Wall Street, Vanguard is a top choice for many investors’ wealth management needs. When you put your money in a health care ETF managed by Vanguard, or any other Vanguard fund, you can rest easy knowing that your investment is safe.

The Vanguard Health Care Index Fund Exchange Traded Fund (ETF) invests in a broad basket of stocks of firms that produce and distribute healthcare goods and services. The VHT is a Vanguard fund, so you know you’ll get a low expense ratio and reliable performance.

2. Health Care Select Sector SPDR Fund (XLV)

  • Expense Ratio: 0.12%
  • One-Year Return: 27.83%
  • Five-Year Annualized Return: 13.88%
  • Dividend Yield: 1.37%
  • Morningstar Rating: 4 out of 5 stars
  • Largest Holdings: Johnson & Johnson (JNJ), UnitedHealth Group (UNH), Pfizer (PFE), Abbott Laboratories (ABT), and AbbVie are among the major holdings in the Health Care Select Sector SPDR Fund’s portfolio (ABBV).
  • Years Up Since Inception: 17 out of 22

State Street Global Advisors, a major Wall Street investment manager, provides the Health Care Select Sector SPDR Fund. The company backing this fund has a solid track record.

The XLV is a passively managed investment vehicle created to replicate the performance of the Health Care Select Sector Index, an indicator of the healthcare sector represented by the S&P 500.

Therefore, investors can have diversified exposure to some of the major healthcare corporations in the United States through the XLV ETF. When compared to similar funds in the healthcare sector, the product offers attractive returns and dividends. 

This exchange-traded fund (ETF) has extremely low costs, well below the industry average, as do the vast majority of funds offered by State Street Global Advisors.

3. ARK Genomic Revolution ETF (ARKG)

  • Expense Ratio: 0.75%
  • One-Year Return: 78.83%
  • Five-Year Annualized Return: 42.6%
  • Dividend Yield: 0%
  • Morningstar Rating: 5 out of 5 stars
  • Largest Holdings: Teladoc Health (TDOC), Exact Sciences (EXAS), Pacific Biosciences of California (PACB), CareDx (CDNA), and Regeneron Pharmaceuticals are among the top holdings of the ARKG ETF (REGN).
  • Years Up Since Inception: 4 out of 6

ARK Invest, another respected name in the world of Wall Street finance management, provides investors with access to the ARK Genomic Revolution Exchange Traded Fund. The ETF’s goal is to offer investors diverse exposure to businesses seeking to improve the length and quality of life for people with debilitating illnesses through technology and scientific advances in genomics.

This fund primarily backs businesses that are working to modify genomes, or individual DNA building blocks, in order to address some of the most serious issues in modern medicine.

Because genomics is such a novel idea with such enormous potential in the medical profession, companies involved in the subject are seeing tremendous growth, making the ARKG ETF one of the greatest performers on our list.

However, it is also important to note that this is one of the ETFs with higher volatility, which increases the risk of investment.

4. Fidelity MSCI Health Care Index ETF (FHLC)

  • Expense Ratio: 0.08%
  • One-Year Return: 29.85%
  • Five-Year Annualized Return: 15.33%
  • Dividend Yield: 1.24%
  • Morningstar Rating: 4 out of 5 stars
  • Largest Holdings: Johnson & Johnson (JNJ), UnitedHealth Group (UNH), Pfizer (PFE), Abbott Laboratories (ABT), and AbbVie are among the top holdings in the FHLC investment portfolio (ABBV).
  • Years Up Since Inception: 6 out of 7

The insurance sector of Fidelity has been instrumental in making the company what it is today. It is also a major player and a reliable option for investors seeking fund management services on Wall Street.

Investors seeking diverse exposure to the U.S. healthcare sector have made the company’s MSCI Health Care Index ETF a go-to choice.

The ETF’s objective is to replicate the performance of the MSCI USA IMI Health Care Index, which is a measure of the total market value of U.S. healthcare companies across all market caps.

The FHLC, like most other Fidelity funds, has done very well for its investors while remaining very inexpensive.

5. iShares Nasdaq Biotechnology ETF (IBB)

  • Expense Ratio: 0.46%
  • One-Year Return: 19.95%
  • Five-Year Annualized Return: 14.04%
  • Dividend Yield: 0.19%
  • Morningstar Rating: 3 out of 5 stars
  • Largest Holdings: Amgen (AMGN), Gilead Sciences (GILD), Moderna (MRNA), Illumina (ILMN), and Regeneron Pharmaceuticals (REGN) are among the top holdings in the iShares Nasdaq Biotechnology ETF (REGN)
  • Years Up Since Inception: 15 out of 19

If you are searching for diverse exposure to the U.S. healthcare sector, iShares’ Nasdaq Biotechnology ETF is another excellent option to explore. The fund’s investment strategy is tailored to give exposure to the healthcare industry’s biotechnology and pharmaceuticals subsectors through holdings in Nasdaq-listed biotech and pharmaceutical businesses.

Because it is an iShares fund, investors can rest assured that their money is being invested in a diverse portfolio of securities chosen by some of Wall Street’s most reputable experts, resulting in above-average returns. The Wall Street Journal reports that the IBB’s fee ratio is about the norm for ETFs, at 0.44%, but the fund’s huge gains more than makeup for the cost.

6. iShares U.S. Healthcare Providers ETF (IHF)

  • Expense Ratio: 0.42%
  • One-Year Return: 38.91%
  • Five-Year Annualized Return: 17.27%
  • Dividend Yield: 0.52%
  • Morningstar Rating: 3 out of 5 stars
  • Largest Holdings: UnitedHealth Group (UNH), CVS Health (CVS), Anthem (ANTM), Humana (HUM), and Centene Corp. are some of the largest companies held by the IHF (CNC).
  • Years Up Since Inception: 13 out of 14

Investment Company (iShares U.S. Each sector of the healthcare industry is represented in the Healthcare Providers ETF. Companies providing health insurance, specialized care, and diagnostics services are the focus of the IHF’s investment portfolio rather than those developing new therapies and therapeutic choices.

The ETF achieves this goal by purchasing shares in an index that is meant to follow the performance of large hospitals and medical clinics in the United States.

The fund has expenses that are just below the industry standard for exchange-traded funds, and its performance is undeniably impressive. However, the iShares U.S. If you’re a healthcare investor, you should definitely consider adding Healthcare Providers ETF to your portfolio.

7. iShares U.S. Medical Devices ETF (IHI)

  • Expense Ratio: 0.42%
  • One-Year Return: 36.76%
  • Five-Year Annualized Return: 22.07%
  • Dividend Yield: 0.33%
  • Morningstar Rating: 5 out of 5 stars
  • Largest Holdings: Abbott Laboratories (ABT), Thermo Fisher Scientific (TMO), Medtronic (MDT), Danaher (DHR), and Intuitive Surgical (ISRG) are the top five holdings in the IHI investment portfolio (ISRG).
  • Years Up Since Inception: 12 out of 14

When purchasing shares of the iShares U.S. Medical Devices ETF, investors gain exposure to a wide range of companies operating in the medical device industry. The company’s focus is on investing in technologies that improve the clinical outcomes of procedures like back surgery, robotic-assisted surgery, and glucose monitoring.

The iShares U.S. Medical Equipment ETF follows an index made up of domestic medical device businesses in order to provide this exposure.

The fund has a cost that is in line with the market average, but its performance over the past decade has been anything but ordinary, with annualized returns during the period of more than 18%, earning it a pristine five-star rating from Morningstar.

8. Invesco S&P 500 Equal Weight Health Care ETF (RYH)

  • Expense Ratio: 0.40%
  • One-Year Return: 32.46%
  • Five-Year Annualized Return: 14.82%
  • Dividend Yield: 0.42%
  • Morningstar Rating: 4 out of 5 stars
  • Largest Holdings: Resmed (RMD), Danaher (DNR), IDEXX Laboratories (IDXX), Thermo Fisher Scientific (TMO), and Bio-Rad Laboratories (BRD) are the top five investments for RYH (BIO).
  • Years Up Since Inception: 11 out of 14

The fund management firm Invesco was established in 1935, making it a veteran in the industry. The company is so prevalent in the ETF market that its inclusion on any “top ETF” list is practically guaranteed.

The ETF, which tracks the S&P 500 Equal Weight Health Care Index, gives investors diversified exposure to the entire healthcare sector. This implies that RYH investors gain exposure to a diverse group of healthcare companies when they buy shares.

The S&P 500 is widely used as a benchmark since it represents more than 70% of the total market capitalization of the U.S. stock market. Investing in all the healthcare stocks tracked by the index is thus a way to gain exposure to some of the most reputable businesses in the United States.

9. SPDR S&P Biotech ETF (XBI)

  • Expense Ratio: 0.35%
  • One-Year Return: 21.22%
  • Five-Year Annualized Return: 20.34%
  • Dividend Yield: 0.23%
  • Morningstar Rating: 2 out of 5 stars
  • Largest Holdings: Intellia Therapeutics (NTLA), Editas Medicine (EDIT), Anavex Life Sciences (AVXL), Beam Therapeutics (BEAM), and MannKind Corporation (MNKD) are the five largest positions in the XBI portfolio (MNKD).
  • Years Up Since Inception: 11 out of 14

State Street Advisors also provides an excellent investment choice in the form of the SPDR S&P 500 Biotech ETF. To mirror the performance of the biotech sector of the healthcare industry, the XBI ETF follows the S&P Biotechnology Select Industry Index. By purchasing this fund, you will be indirectly purchasing shares in each of the S&P 500 biotechnology businesses.

Not only have investors seen above-average returns from XBIO, but they also pay less than usual for a mutual fund of similar quality. When compared to the other dividend earners on this list, the SPDR S&P Biotech ETF isn’t particularly impressive. However, the fund has a solid track record of generating gains that significantly outpace the market as a whole.

Bottom Line

If you’re an investor who wants to put your money to work doing good in the world, healthcare ETFs are a terrific choice. Not only do the best exchange-traded funds in this industry routinely outperform the market but you can be assured that your money is going toward the development of treatments and technologies that will help people live better lives for longer.

Healthcare exchange-traded funds (ETFs) offer a potentially lucrative route to stock market wealth accumulation, but it’s vital to keep in mind that not all ETFs are made equal. Before investing in a fund, it is important to conduct your homework and learn about its track record, as well as its fees and other costs.

However, the aforementioned ETFs are some of the best performers in the healthcare business and make a perfect first watchlist for the newbie to healthcare ETF investing.

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