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Should You Invest in the Health Care Select Sector SPDR ETF (XLV)?
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Launched on 12/16/1998, the Health Care Select Sector SPDR ETF (XLV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $39.91 billion, making it the largest ETF attempting to match the performance of the Healthcare - Broad segment of the equity market. XLV seeks to match the performance of the Health Care Select Sector Index before fees and expenses.
The Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.49%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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, Unitedhealth Group Incorporated (UNH - Free Report) accounts for about 10.32% of total assets, followed by Johnson & Johnson (JNJ - Free Report) and Pfizer Inc. (PFE - Free Report) .
The top 10 holdings account for about 55% of total assets under management.
Performance and Risk
Year-to-date, the Health Care Select Sector SPDR ETF has lost about -4.71% so far, and is up about 0.18% over the last 12 months (as of 11/10/2022). XLV has traded between $119.89 and $142.83 in this past 52-week period.
The ETF has a beta of 0.73 and standard deviation of 21.64% for the trailing three-year period, making it a medium risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.
Alternatives
Health Care Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLV is an excellent 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.
IShares Global Healthcare ETF (IXJ - Free Report) tracks S&P Global 1200 Healthcare Sector Index and the Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index. IShares Global Healthcare ETF has $3.75 billion in assets, Vanguard Health Care ETF has $16.43 billion. IXJ has an expense ratio of 0.40% and VHT charges 0.10%.
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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Should You Invest in the Health Care Select Sector SPDR ETF (XLV)?
Launched on 12/16/1998, the Health Care Select Sector SPDR ETF (XLV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $39.91 billion, making it the largest ETF attempting to match the performance of the Healthcare - Broad segment of the equity market. XLV seeks to match the performance of the Health Care Select Sector Index before fees and expenses.
The Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.49%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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, Unitedhealth Group Incorporated (UNH - Free Report) accounts for about 10.32% of total assets, followed by Johnson & Johnson (JNJ - Free Report) and Pfizer Inc. (PFE - Free Report) .
The top 10 holdings account for about 55% of total assets under management.
Performance and Risk
Year-to-date, the Health Care Select Sector SPDR ETF has lost about -4.71% so far, and is up about 0.18% over the last 12 months (as of 11/10/2022). XLV has traded between $119.89 and $142.83 in this past 52-week period.
The ETF has a beta of 0.73 and standard deviation of 21.64% for the trailing three-year period, making it a medium risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.
Alternatives
Health Care Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLV is an excellent 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.
IShares Global Healthcare ETF (IXJ - Free Report) tracks S&P Global 1200 Healthcare Sector Index and the Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index. IShares Global Healthcare ETF has $3.75 billion in assets, Vanguard Health Care ETF has $16.43 billion. IXJ has an expense ratio of 0.40% and VHT charges 0.10%.
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.