Designed to provide broad exposure to the Healthcare - Medical Devices segment of the equity market, the iShares U.S. Medical Devices ETF (
IHI Quick Quote IHI - Free Report) is a passively managed exchange traded fund launched on 05/01/2006.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Medical Devices is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Blackrock. It has amassed assets over $6.48 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Medical Devices segment of the equity market. IHI seeks to match the performance of the Dow Jones U.S. Select Medical Equipment Index before fees and expenses.
The Dow Jones U.S. Select Medical Equipment Index measures the performance of the medical equipment sector of the U.S. equity market.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.31%.
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, Thermo Fisher Scientific Inc (
TMO Quick Quote TMO - Free Report) accounts for about 17.42% of total assets, followed by Abbott Laboratories ( ABT Quick Quote ABT - Free Report) and Medtronic Plc ( MDT Quick Quote MDT - Free Report) .
The top 10 holdings account for about 71.55% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Medical Devices ETF has lost about -19.95% so far, and is down about -19.39% over the last 12 months (as of 09/14/2022). IHI has traded between $47.65 and $66.41 in this past 52-week period.
The ETF has a beta of 0.89 and standard deviation of 24.97% for the trailing three-year period, making it a medium risk choice in the space. With about 70 holdings, it effectively diversifies company-specific risk.
IShares U.S. Medical Devices 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, IHI is a reasonable 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.
First Trust Indxx Medical Devices ETF (
MDEV Quick Quote MDEV - Free Report) tracks INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the SPDR S&P Health Care Equipment ETF ( XHE Quick Quote XHE - Free Report) tracks S&P Health Care Equipment Select Industry Index. First Trust Indxx Medical Devices ETF has $1.91 million in assets, SPDR S&P Health Care Equipment ETF has $430.76 million. MDEV has an expense ratio of 0.70% and XHE charges 0.35%. Bottom Line
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