The iShares U.S. Healthcare ETF (
IYH Quick Quote IYH - Free Report) was launched on 06/12/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Healthcare - Broad segment of the equity market.
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 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 - Broad 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 $3.18 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. IYH seeks to match the performance of the Dow Jones U.S. Health Care Index before fees and expenses.
The Russell 1000 Health Care RIC 22.5/45 Capped Gross Index measures the performance of the healthcare sector of the U.S. equity market.
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 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.14%.
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.
This ETF has heaviest allocation in the Healthcare sector--about 99.90% of the portfolio.
Looking at individual holdings, Unitedhealth Group Inc (
UNH Quick Quote UNH - Free Report) accounts for about 8.87% of total assets, followed by Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) and Eli Lilly ( LLY Quick Quote LLY - Free Report) .
The top 10 holdings account for about 52.93% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Healthcare ETF has lost about -1.69% so far, and is up roughly 6.01% over the last 12 months (as of 09/20/2023). IYH has traded between $252.68 and $291.18 in this past 52-week period.
The ETF has a beta of 0.70 and standard deviation of 15.30% for the trailing three-year period, making it a medium risk choice in the space. With about 121 holdings, it effectively diversifies company-specific risk.
IShares U.S. Healthcare 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, IYH is an excellent 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.
Vanguard Health Care ETF (
VHT Quick Quote VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF ( XLV Quick Quote XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.75 billion in assets, Health Care Select Sector SPDR ETF has $39.33 billion. VHT has an expense ratio of 0.10% and XLV charges 0.10%. Bottom Line
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