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Is SPDR S&P Health Care Equipment ETF (XHE) a Strong ETF Right Now?
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Launched on 01/26/2011, the SPDR S&P Health Care Equipment ETF (XHE - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by State Street Global Advisors. It has amassed assets over $480.89 million, making it one of the average sized ETFs in the Health Care ETFs. XHE, before fees and expenses, seeks to match the performance of the S&P Health Care Equipment Select Industry Index.
The S&P Health Care Equipment Select Industry Index represents the health care equipment segment of the S&P Total Market Index.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.35% for XHE, making it one of the least expensive products in the space.
XHE's 12-month trailing dividend yield is 0.03%.
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.
For XHE, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Taking into account individual holdings, Abiomed Inc. accounts for about 2.05% of the fund's total assets, followed by Dexcom Inc. (DXCM - Free Report) and Intuitive Surgical Inc. (ISRG - Free Report) .
XHE's top 10 holdings account for about 18% of its total assets under management.
Performance and Risk
The ETF return is roughly 10.99% and is down about -1.78% so far this year and in the past one year (as of 02/06/2023), respectively. XHE has traded between $79.20 and $114.46 during this last 52-week period.
XHE has a beta of 0.93 and standard deviation of 29.53% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Health Care Equipment ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
First Trust Indxx Medical Devices ETF (MDEV - Free Report) tracks INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the iShares U.S. Medical Devices ETF (IHI - Free Report) tracks Dow Jones U.S. Select Medical Equipment Index. First Trust Indxx Medical Devices ETF has $2.08 million in assets, iShares U.S. Medical Devices ETF has $6.37 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.39%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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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Is SPDR S&P Health Care Equipment ETF (XHE) a Strong ETF Right Now?
Launched on 01/26/2011, the SPDR S&P Health Care Equipment ETF (XHE - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by State Street Global Advisors. It has amassed assets over $480.89 million, making it one of the average sized ETFs in the Health Care ETFs. XHE, before fees and expenses, seeks to match the performance of the S&P Health Care Equipment Select Industry Index.
The S&P Health Care Equipment Select Industry Index represents the health care equipment segment of the S&P Total Market Index.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.35% for XHE, making it one of the least expensive products in the space.
XHE's 12-month trailing dividend yield is 0.03%.
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.
For XHE, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Taking into account individual holdings, Abiomed Inc. accounts for about 2.05% of the fund's total assets, followed by Dexcom Inc. (DXCM - Free Report) and Intuitive Surgical Inc. (ISRG - Free Report) .
XHE's top 10 holdings account for about 18% of its total assets under management.
Performance and Risk
The ETF return is roughly 10.99% and is down about -1.78% so far this year and in the past one year (as of 02/06/2023), respectively. XHE has traded between $79.20 and $114.46 during this last 52-week period.
XHE has a beta of 0.93 and standard deviation of 29.53% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Health Care Equipment ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
First Trust Indxx Medical Devices ETF (MDEV - Free Report) tracks INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the iShares U.S. Medical Devices ETF (IHI - Free Report) tracks Dow Jones U.S. Select Medical Equipment Index. First Trust Indxx Medical Devices ETF has $2.08 million in assets, iShares U.S. Medical Devices ETF has $6.37 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.39%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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.