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Is SPDR S&P Health Care Equipment ETF (XHE) a Strong ETF Right Now?
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Designed to provide broad exposure to the Health Care ETFs category of the market, the SPDR S&P Health Care Equipment ETF (XHE - Free Report) is a smart beta exchange traded fund launched on 01/26/2011.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
XHE is managed by State Street Global Advisors, and this fund has amassed over $349.68 million, which makes it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, XHE 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 0.03%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
XHE's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
When you look at individual holdings, Globus Medical Inc A (GMED - Free Report) accounts for about 1.94% of the fund's total assets, followed by Ge Healthcare Technology (GEHC - Free Report) and Lantheus Holdings Inc (LNTH - Free Report) .
Its top 10 holdings account for approximately 18.54% of XHE's total assets under management.
Performance and Risk
The ETF has gained about 0% so far this year and is down about -6.23% in the last one year (as of 01/02/2024). In the past 52-week period, it has traded between $66.75 and $101.18.
The fund has a beta of 0.96 and standard deviation of 25.99% for the trailing three-year period, which makes XHE a medium risk choice in this particular space. With about 73 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 $3.04 million in assets, iShares U.S. Medical Devices ETF has $5.38 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.40%.
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?
Designed to provide broad exposure to the Health Care ETFs category of the market, the SPDR S&P Health Care Equipment ETF (XHE - Free Report) is a smart beta exchange traded fund launched on 01/26/2011.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
XHE is managed by State Street Global Advisors, and this fund has amassed over $349.68 million, which makes it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, XHE 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 0.03%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
XHE's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
When you look at individual holdings, Globus Medical Inc A (GMED - Free Report) accounts for about 1.94% of the fund's total assets, followed by Ge Healthcare Technology (GEHC - Free Report) and Lantheus Holdings Inc (LNTH - Free Report) .
Its top 10 holdings account for approximately 18.54% of XHE's total assets under management.
Performance and Risk
The ETF has gained about 0% so far this year and is down about -6.23% in the last one year (as of 01/02/2024). In the past 52-week period, it has traded between $66.75 and $101.18.
The fund has a beta of 0.96 and standard deviation of 25.99% for the trailing three-year period, which makes XHE a medium risk choice in this particular space. With about 73 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 $3.04 million in assets, iShares U.S. Medical Devices ETF has $5.38 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.40%.
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.