iShares Dow Jones US Healthcare ProviderIHF

Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough

Suitability
IShares Dow Jones US Healthcare Providers Index Fund IHF holds companies that make up much of the backbone of the U.S. health-care industry. It holds a variety of companies that actually operate hospitals, perform diagnostics, Read more

Bull Case

Given litigation and regulatory worries in the health-care sector, an ETF is an effective vehicle for diversifying away much of the company-specific risk.

The health-care sector could enjoy a secular tailwind propelled by the aging population.

Several of the subindustries in this ETF have interesting opportunities ahead, such as the PBM space in general and diagnostics firms in the emerging-markets arena. Read more

Bear Case

The stock prices of health-care companies (drug companies in particular) can be very sensitive to the possibility of increased governmental regulation of prices. Tackling the rising expense of health care is increasingly a priority for politicians.

The fund invests more than 61% of assets in its top-10 holdings. Thus, the portfolio's risk and valuation are strongly influenced by just a handful of large-cap stocks.

Both the hospitals and the managed-care organizations subindustries, which have large weightings in this ETF, are expected to lose under recently enacted health-care reform legislation. Read more