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Healthcare ETFs Gain on Rising Demand for COVID-19 Tests
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The coronavirus crisis shows no signs of dissipating any time soon, with the United States now leading the world in the number of confirmed coronavirus cases. The world’s third most populous nation with 330 million residents, the United States has reported at least 160,000 confirmed cases with a death toll of at least 3000. To combat the outbreak, President Trump has extended the federal government’s guidelines for social distancing until Apr 30.
It is being believed that testing for the COVID-19 is the major key in controlling the outbreak. It is required to make important decisions like treatment protocols, appropriate resource allocation and drafting right healthcare policies. Accordingly, a large increase in demand for testing kits is being observed, engaging some major players in the race to come up with the most effective testing kit in a timely manner (read: ETF Strategies to Follow Amid the Coronavirus Crisis).
Race for COVID-19 Testing Kits Intensifies
Considering the growing demand for testing kits, the FDA has allowed certain certified laboratories to begin developing validated coronavirus diagnostics on a priority basis. However, the test will have to be submitted for review within 15 days to the federal agency. Accordingly, several key biotech and molecular diagnostic players received FDA’s Emergency Use Authorization (EUA) for the tests so that diagnostic professionals could immediately begin conducting the same in any state health laboratory.
Notably, a major player in the medical devices space, Abbott (ABT - Free Report) recently launched a highly-portable and fastest-available molecular point-of-care test for the detection of the coronavirus. This test delivers positive results in just five minutes and negative results in 13 minutes. Abbott’s vice president of research and development, John Frels, Ph.D., has commented on the test that "this is going to be the fastest molecular point-of-care test to date." The company has also launched its Abbott m2000RealTime SARS-CoV-2 EUA test, which runs on the m2000 RealTime System located in hospitals and reference labs, globally.
Another player, Hologic (HOLX - Free Report) has also received the FDA’s EUA for its latest molecular diagnostic test, Panther Fusion SARS-CoV-2 assay, which will be used for the qualitative detection of RNA from the SARS-CoV-2. Global manufacturer of scientific instruments, Thermo Fisher (TMO - Free Report) recently attained the FDA’s EUA for its diagnostic test to be used immediately by Clinical Laboratory Improvement Amendments’ high-complexity laboratories in the United States. The test has been developed for the detection of nucleic acid exclusively from SARS-CoV-2.
Huge demand for the serological tests, also known as immunity tests for the antibodies to the virus, is being observed. The identification of immunity level to the virus will aid in combatting the serious concern of staffing shortages. Accordingly, around 3.5 million serological tests have been ordered by the United Kingdom with increasing demand in the United States as well. Germany is also contemplating the use of the test to issue immunity certificates to the COVID-19 survivors. In such a scenario, Henry Schein (HSIC - Free Report) has informed about availability of an antibody rapid blood test, known as Standard Q COVID-19 IgM/IgG Rapid Test. The test can deliver results within 15 minutes from a pinprick, with no need for instrumentation.
Healthcare ETFs That Might Gain
It is worth noting here that the healthcare sector has been outperforming the S&P 500 index so far in 2020. In this regard, the Health Care Select Sector Index has lost 12.7% in the year-to-date period in comparison to the S&P 500’s decline of 18.7%.
The continuous race to introduce appropriate treatments for the COVID-19 is resulting in near-term opportunities, making the healthcare sector a good space for investments. Therefore, we discuss a few ETFs that seek to provide exposure to the healthcare sector (see all Health Care ETFs here):
The most popular healthcare ETF, XLV follows the Health Care Select Sector Index. In total, the fund holds 60 securities in its basket, with the pharma sector taking the largest share at 33.2%. Healthcare equipment and supplies, healthcare providers and services, and biotech also have double-digit exposure each. The product manages nearly $18.59 billion in its asset base. The expense ratio is at 0.13%. XLV has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: ETF Strategies & Best Practices Amid Coronavirus Volatility).
The Vanguard Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. This fund comprises stocks of companies involved in providing medical or health care products, services, technology, or equipment. The fund holds 389 stocks in its basket and has a 0.10% expense ratio. It has accumulated $8.67 billion in its asset base. VHT has a Zacks ETF Rank #2 with a Medium risk outlook.
The fund provides exposure to U.S. companies that manufacture and distribute medical devices by tracking the Dow Jones U.S. Select Medical Equipment Index. In total, the fund holds 56 securities in its basket with net assets of $4.17 billion. It charges 43 bps in fees per year. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of S&P Health Care Equipment Select Industry Index. In total, the fund holds 67 securities in its basket with net assets of $420.5 million. It charges 35 bps in fees per year. The fund has a Zacks ETF Rank #3 with a Medium risk outlook.
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Healthcare ETFs Gain on Rising Demand for COVID-19 Tests
The coronavirus crisis shows no signs of dissipating any time soon, with the United States now leading the world in the number of confirmed coronavirus cases. The world’s third most populous nation with 330 million residents, the United States has reported at least 160,000 confirmed cases with a death toll of at least 3000. To combat the outbreak, President Trump has extended the federal government’s guidelines for social distancing until Apr 30.
It is being believed that testing for the COVID-19 is the major key in controlling the outbreak. It is required to make important decisions like treatment protocols, appropriate resource allocation and drafting right healthcare policies. Accordingly, a large increase in demand for testing kits is being observed, engaging some major players in the race to come up with the most effective testing kit in a timely manner (read: ETF Strategies to Follow Amid the Coronavirus Crisis).
Race for COVID-19 Testing Kits Intensifies
Considering the growing demand for testing kits, the FDA has allowed certain certified laboratories to begin developing validated coronavirus diagnostics on a priority basis. However, the test will have to be submitted for review within 15 days to the federal agency. Accordingly, several key biotech and molecular diagnostic players received FDA’s Emergency Use Authorization (EUA) for the tests so that diagnostic professionals could immediately begin conducting the same in any state health laboratory.
Notably, a major player in the medical devices space, Abbott (ABT - Free Report) recently launched a highly-portable and fastest-available molecular point-of-care test for the detection of the coronavirus. This test delivers positive results in just five minutes and negative results in 13 minutes. Abbott’s vice president of research and development, John Frels, Ph.D., has commented on the test that "this is going to be the fastest molecular point-of-care test to date." The company has also launched its Abbott m2000RealTime SARS-CoV-2 EUA test, which runs on the m2000 RealTime System located in hospitals and reference labs, globally.
Another player, Hologic (HOLX - Free Report) has also received the FDA’s EUA for its latest molecular diagnostic test, Panther Fusion SARS-CoV-2 assay, which will be used for the qualitative detection of RNA from the SARS-CoV-2. Global manufacturer of scientific instruments, Thermo Fisher (TMO - Free Report) recently attained the FDA’s EUA for its diagnostic test to be used immediately by Clinical Laboratory Improvement Amendments’ high-complexity laboratories in the United States. The test has been developed for the detection of nucleic acid exclusively from SARS-CoV-2.
Huge demand for the serological tests, also known as immunity tests for the antibodies to the virus, is being observed. The identification of immunity level to the virus will aid in combatting the serious concern of staffing shortages. Accordingly, around 3.5 million serological tests have been ordered by the United Kingdom with increasing demand in the United States as well. Germany is also contemplating the use of the test to issue immunity certificates to the COVID-19 survivors. In such a scenario, Henry Schein (HSIC - Free Report) has informed about availability of an antibody rapid blood test, known as Standard Q COVID-19 IgM/IgG Rapid Test. The test can deliver results within 15 minutes from a pinprick, with no need for instrumentation.
Healthcare ETFs That Might Gain
It is worth noting here that the healthcare sector has been outperforming the S&P 500 index so far in 2020. In this regard, the Health Care Select Sector Index has lost 12.7% in the year-to-date period in comparison to the S&P 500’s decline of 18.7%.
The continuous race to introduce appropriate treatments for the COVID-19 is resulting in near-term opportunities, making the healthcare sector a good space for investments. Therefore, we discuss a few ETFs that seek to provide exposure to the healthcare sector (see all Health Care ETFs here):
Health Care Select Sector SPDR Fund (XLV - Free Report)
The most popular healthcare ETF, XLV follows the Health Care Select Sector Index. In total, the fund holds 60 securities in its basket, with the pharma sector taking the largest share at 33.2%. Healthcare equipment and supplies, healthcare providers and services, and biotech also have double-digit exposure each. The product manages nearly $18.59 billion in its asset base. The expense ratio is at 0.13%. XLV has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: ETF Strategies & Best Practices Amid Coronavirus Volatility).
Vanguard Health Care ETF (VHT - Free Report)
The Vanguard Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. This fund comprises stocks of companies involved in providing medical or health care products, services, technology, or equipment. The fund holds 389 stocks in its basket and has a 0.10% expense ratio. It has accumulated $8.67 billion in its asset base. VHT has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares U.S. Medical Devices ETF (IHI - Free Report)
The fund provides exposure to U.S. companies that manufacture and distribute medical devices by tracking the Dow Jones U.S. Select Medical Equipment Index. In total, the fund holds 56 securities in its basket with net assets of $4.17 billion. It charges 43 bps in fees per year. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
SPDR S&P Health Care Equipment ETF (XHE - Free Report)
The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of S&P Health Care Equipment Select Industry Index. In total, the fund holds 67 securities in its basket with net assets of $420.5 million. It charges 35 bps in fees per year. The fund has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>