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China's COVID-19 Lockdown Brings Back Focus on Healthcare ETFs
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Wall Street is feeling the burden of the Russia-Ukraine war crisis, high inflation level and chances of a Fed rate hike this week. Consequently, the major two broad market indices, the S&P 500 and the Nasdaq Composite, lost about 0.7% and 2%, respectively, on Mar 14.
However, the healthcare sector showed some strength in the dull market as the prominent vaccine makers Moderna (MRNA - Free Report) and Pfizer (PFE - Free Report) saw their stocks gaining 8.5% and 3.9%, respectively on Mar 14. The upside in these stocks has come largely due to the rising COVID-19 cases in China. It appears as if China is seeing the worst outbreak conditions since the pandemic-peak in 2020.
As Beijing strives to maintain its zero-COVID strategy, orders have been imposed to shut down all nonessential business activities and run city-wide tests. The city, also known as China’s “Silicon Valley,” happens to be the biggest city in the manufacturing hub of Guangdong province. Undoubtedly, the pandemic has triggered a race to introduce vaccines, tests and treatment options, opening up investment opportunities in the healthcare sector.
Going on, the healthcare sector stands as a good defensive investment as several investors believe that consumers will have to purchase healthcare products even during tough and uncertain times. Currently, the Russia-Ukraine war crisis and the chances of a Fed rate hike have caused a lot of uncertainty in the markets.
Russia continues to attack and shell Kyiv, the capital of Ukraine. This has led to an increase in sanctions on Kremlin by the United States and its western allies. Recently, the fourth package of sanctions aiming at more than 600 Russian nationals has been given the nod by European finance ministers (per a CNN report).
Meanwhile, Federal Reserve Chairman Jerome Powell is expected to raise the benchmark interest rate from near zero for the first time since 2018 at the Mar 15-16 monetary policy committee meeting to combat hot inflation levels. Powell proposed a quarter-point hike instead of a half-point, largely due to uncertainty related to the Russia-Ukraine war crisis.
Healthcare ETFs in Focus
Investors can take a look at the following healthcare ETFs:
The Health Care Select Sector SPDR Fund (XLV - Free Report) — up 0.7% on Mar 14
The Health Care Select Sector SPDR Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Health Care Select Sector Index. XLV manages AUM of $34.13 billion and charges 10 basis points (bps) in fees. The Health Care Select Sector SPDR Fund sports a Zacks ETF Rack #1 (Strong Buy), with a Medium-risk outlook (read: 6 Sector ETFs That Show Promise After Jobs Data).
Vanguard Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. VHT has an AUM of $16.26 billion and charges 10 bps in fees. Vanguard Health Care ETF also carries a Zacks ETF Rack #1, with a Medium-risk outlook.
iShares U.S. Healthcare ETF (IYH - Free Report) — up 0.4%
The iShares U.S. Healthcare ETF seeks to track the investment results of an index composed of U.S. equities in the healthcare sector. With an AUM of $2.80 billion, IYH charges 41 bps in fees. The iShares U.S. Healthcare ETF also sports a Zacks ETF Rack #1, with a Medium-risk outlook (read: UnitedHealth's Solid Q4 Earnings Put These ETFs in Focus).
Fidelity MSCI Health Care Index ETF (FHLC - Free Report) — up 0.1%
Fidelity MSCI Health Care Index ETF seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Health Care Index. FHLC charges an expense ratio of 8 bps and has amassed $2.76 billion in assets under management. Fidelity MSCI Health Care Index ETF carries a Zacks ETF Rack #3 (Hold), with a Medium-risk outlook.
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China's COVID-19 Lockdown Brings Back Focus on Healthcare ETFs
Wall Street is feeling the burden of the Russia-Ukraine war crisis, high inflation level and chances of a Fed rate hike this week. Consequently, the major two broad market indices, the S&P 500 and the Nasdaq Composite, lost about 0.7% and 2%, respectively, on Mar 14.
However, the healthcare sector showed some strength in the dull market as the prominent vaccine makers Moderna (MRNA - Free Report) and Pfizer (PFE - Free Report) saw their stocks gaining 8.5% and 3.9%, respectively on Mar 14. The upside in these stocks has come largely due to the rising COVID-19 cases in China. It appears as if China is seeing the worst outbreak conditions since the pandemic-peak in 2020.
As Beijing strives to maintain its zero-COVID strategy, orders have been imposed to shut down all nonessential business activities and run city-wide tests. The city, also known as China’s “Silicon Valley,” happens to be the biggest city in the manufacturing hub of Guangdong province. Undoubtedly, the pandemic has triggered a race to introduce vaccines, tests and treatment options, opening up investment opportunities in the healthcare sector.
Going on, the healthcare sector stands as a good defensive investment as several investors believe that consumers will have to purchase healthcare products even during tough and uncertain times. Currently, the Russia-Ukraine war crisis and the chances of a Fed rate hike have caused a lot of uncertainty in the markets.
Russia continues to attack and shell Kyiv, the capital of Ukraine. This has led to an increase in sanctions on Kremlin by the United States and its western allies. Recently, the fourth package of sanctions aiming at more than 600 Russian nationals has been given the nod by European finance ministers (per a CNN report).
Meanwhile, Federal Reserve Chairman Jerome Powell is expected to raise the benchmark interest rate from near zero for the first time since 2018 at the Mar 15-16 monetary policy committee meeting to combat hot inflation levels. Powell proposed a quarter-point hike instead of a half-point, largely due to uncertainty related to the Russia-Ukraine war crisis.
Healthcare ETFs in Focus
Investors can take a look at the following healthcare ETFs:
The Health Care Select Sector SPDR Fund (XLV - Free Report) — up 0.7% on Mar 14
The Health Care Select Sector SPDR Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Health Care Select Sector Index. XLV manages AUM of $34.13 billion and charges 10 basis points (bps) in fees. The Health Care Select Sector SPDR Fund sports a Zacks ETF Rack #1 (Strong Buy), with a Medium-risk outlook (read: 6 Sector ETFs That Show Promise After Jobs Data).
Vanguard Health Care ETF (VHT - Free Report) — up 0.2%
Vanguard Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. VHT has an AUM of $16.26 billion and charges 10 bps in fees. Vanguard Health Care ETF also carries a Zacks ETF Rack #1, with a Medium-risk outlook.
iShares U.S. Healthcare ETF (IYH - Free Report) — up 0.4%
The iShares U.S. Healthcare ETF seeks to track the investment results of an index composed of U.S. equities in the healthcare sector. With an AUM of $2.80 billion, IYH charges 41 bps in fees. The iShares U.S. Healthcare ETF also sports a Zacks ETF Rack #1, with a Medium-risk outlook (read: UnitedHealth's Solid Q4 Earnings Put These ETFs in Focus).
Fidelity MSCI Health Care Index ETF (FHLC - Free Report) — up 0.1%
Fidelity MSCI Health Care Index ETF seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Health Care Index. FHLC charges an expense ratio of 8 bps and has amassed $2.76 billion in assets under management. Fidelity MSCI Health Care Index ETF carries a Zacks ETF Rack #3 (Hold), with a Medium-risk outlook.