Launched on 01/26/2011, the SPDR S&P Health Care Equipment ETF (
XHE Quick Quote XHE - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Medical Devices segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Medical Devices 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 $800.05 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Medical Devices segment of the equity market. XHE seeks to match the performance of the S&P Health Care Equipment Select Industry Index before fees and expenses.
This Index represents the health care equipment and supplies sector of the S&P Total Market Index. The Index is one of nineteen S&P Select Industry Indices, each designed to measure the performance of a narrow sub-industry or group of sub-industries as defined by the GICS.The Health Care Index is a modified equal weight index.
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.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
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, Transmedics Group Inc. (
TMDX Quick Quote TMDX - Free Report) accounts for about 1.46% of total assets, followed by Biolife Solutions Inc. ( BLFS Quick Quote BLFS - Free Report) and Lantheus Holdings Inc ( LNTH Quick Quote LNTH - Free Report) .
The top 10 holdings account for about 13.82% of total assets under management.
Performance and Risk
The ETF has added about 10.75% so far this year and it's up approximately 31.14% in the last one year (as of 09/29/2021). In that past 52-week period, it has traded between $96.18 and $133.34.
The ETF has a beta of 0.96 and standard deviation of 24.82% for the trailing three-year period, making it a medium risk choice in the space. With about 87 holdings, it effectively diversifies company-specific risk.
SPDR S&P Health Care Equipment 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, XHE is a great 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.
First Trust Indxx Medical Devices ETF (
MDEV Quick Quote MDEV - Free Report) tracks INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the iShares U.S. Medical Devices ETF ( IHI Quick Quote IHI - Free Report) tracks Dow Jones U.S. Select Medical Equipment Index. First Trust Indxx Medical Devices ETF has $28.95 million in assets, iShares U.S. Medical Devices ETF has $8.39 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.41%. Bottom Line
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