Healthcare, which registered its second-worst performance among the 11 major S&P 500 sectors this year, bounced back with an outperformance starting the fourth quarter. This is primarily owing to successive positive news including trial results, deal activities and better-than-expected earnings. Further, uncertainty over trade lent a boost to the sector given its non-cyclical nature, which in turn, provides a cushion to its portfolio.
Moreover, the sector is clearly benefiting from encouraging trends including new drug approvals, an accelerated pace of innovation, promising drug launches, growing importance of biosimilars, cost-cutting efforts, an aging population, expanding insurance coverage, the rising middleclass, insatiable demand for new drug, and an ever-increasing health care spending (read: Top & Flop ETFs Halfway Through Q4).
Additionally, the health care sector is placed at the top 7% of 16 Zacks sectors with more than 80% of the industries having a top Zacks Industry Rank. This indicates optimism surrounding the sector.
In light of this, we choose five healthcare ETFs and stocks that are leading the market so far this quarter. These could be excellent plays for investors if similar trends continue.
Virtus LifeSci Biotech Clinical Trials ETF BBC — Up 23.2%
This fund has a novel approach to biotechnology investing with exposure to companies that are in the clinical trial stage. This can easily be done by tracking the LifeSci Biotechnology Clinical Trials Index. BBC has amassed $26.1 million in its asset base and charges 79 bps in fees per year from its investors. It trades in a light average daily volume of around 4,000 shares and holds 95 securities in its basket. The product carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Top-Ranked ETFs That Crushed the Market in a Month).
iShares U.S. Healthcare Providers ETF IHF — Up 19.3%
This ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics and specialized treatment. In total, the fund holds 49 securities in its basket. The fund amassed $847.9 million in its asset base, while volume is moderate at about 65,000 shares per day on average. It charges 43 bps in annual fees and has a Zacks ETF Rank of 3 with a Medium risk outlook.
ALPS Medical Breakthroughs ETF SBIO — Up 18.4%
This fund provides exposure to companies with one or more drugs in Phase II or Phase III FDA clinical trials by tracking the S-Network Medical Breakthroughs Index. It holds 50 securities in its basket and charges 50 basis points in fees per year from investors and trades in a moderate average daily volume of about 33,000 shares. It has AUM of $183.5 million in its asset base and has a Zacks ETF Rank #3 with High risk outlook.
The Cancer Immunotherapy ETF CNCR — Up 17.6%
This ETF offers exposure to a basket of companies that develop therapies to treat cancer by harnessing the body's own immune system. Holding 26 stocks in its basket, it has AUM of $36.2 million and trade in average daily volume of 9,000 shares. The product charges 79 bps in annual fees and is Zacks #3 Ranked ETF with High risk outlook (read: Healthcare Drives Wall Street: 5 Soaring ETFs & Stocks).
Global X Genomics & Biotechnology ETF GNOM — Up 15.8%
This is a new entrant in the space having accumulated $17.3 million since its inception on Apr 5. It seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. The product follows the Solactive Genomics Index, charging 68 bps in annual fees. It holds 41 stocks in its basket and trades in average daily volume of 4,000 shares.
Jounce Therapeutics Inc. JNCE — Up 49.9%
This clinical-stage immunotherapy company is engaged in developing therapies, which enable the immune system to attack tumors. The stock has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. It has a market cap of $170.5 million. You can see the complete list of today’s Zacks #1 Rank stocks here.
BioDelivery Sciences International Inc. (BDSI) — Up 49.9%
It is a specialty pharmaceutical company focused on the development and commercialization of treatments in the areas of pain management and drug addiction. With a market cap of $550.6 million, the stock has a Zacks Rank #2 and a VGM Score of B.
Ironwood Pharmaceuticals Inc. IRWD — Up 37.5%
This commercial biotechnology company is engaged in research, development and commercialization of human therapeutic products. It has a Zacks Rank #1 and a VGM Score of B. The stock has a market cap of $1.8 billion (read: Biotech ETFs in Focus on Impressive Q3 Earnings Results).
Osmotica Pharmaceuticals plc — Up 31.5%
This biopharmaceutical company offers tablets, dietary supplements and drugs for the treatment of women's health. With a market cap of $275.6 million, it has a Zacks Rank #2 and a VGM Score of A.
Select Medical Holdings Corporation SEM — Up 28.8%
This company operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics and occupational health centers in the United States. The stock has a Zacks Rank of 1 and a VGM Score of A. It has a market cap of $2.9 billion.
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