Designed to provide broad exposure to the Healthcare - Services segment of the equity market, the SPDR S&P Health Care Services ETF (
XHS Quick Quote XHS - Free Report) is a passively managed exchange traded fund launched on 09/28/2011.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Services is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $202.79 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Services segment of the equity market. XHS seeks to match the performance of the S&P Health Care Services Select Industry Index before fees and expenses.
The S&P Health Care Services Select Industry Index represents the health care sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Health Care Index is a modified equal weight index.
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.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.18%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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, Fulgent Genetics Inc. (
FLGT Quick Quote FLGT - Free Report) accounts for about 2.16% of total assets, followed by Humana Inc. ( HUM Quick Quote HUM - Free Report) and Laboratory Corporation Of America Holdings ( LH Quick Quote LH - Free Report) .
The top 10 holdings account for about 19.58% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Health Care Services ETF return is roughly 15.84% so far, and was up about 49.94% over the last 12 months (as of 07/26/2021). XHS has traded between $71.29 and $115.63 in this past 52-week period.
The ETF has a beta of 1.08 and standard deviation of 27.64% for the trailing three-year period, making it a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
SPDR S&P Health Care Services ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XHS is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.