Exchange Traded Funds (ETFs)

Gain Exposure to the Health Care Sector with This Fund

iShares U.S. Healthcare ETF (NYSEARCA:IYH) tracks a market-cap-weighted index of pharmaceutical, biotechnology, health care services and equipment companies in the United States.

IYH represents the health care segment by holding an assortment of the largest pharma, health care and biotech companies in the United States. The fund tracks an index of large- and mid-cap companies in the health care sector, which consists of pharmaceuticals, biotechnology, health care services and equipment companies. Stocks within IYH are selected and weighted by float-adjusted market-cap.

The index caps individual securities at 22.5% and also caps all issuers individually exceeding 4.5% to a maximum of 45% of the fund. Index rebalancing is done on a quarterly basis. Prior to September 20, 2021, the fund tracked the Dow Jones U.S. Health Care Index.

Source: StockCharts.com

The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. The underlying index measures the performance of the healthcare sector of the U.S. equity market. The fund is non-diversified.

IYH has $2.89 billion in assets under management and a 0.05% average spread. Its expense ratio is 0.41%, meaning it is relatively inexpensive to hold in relation to other exchange-traded funds. It has 115 holdings and pays a 1.07% dividend, which is always a plus.

While IYH provides investors with great exposure to the health care sector, this kind of ETF may not be appropriate for all portfolios. Interested investors always should conduct their own due diligence in deciding whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.