Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Investors seeking broad exposure to the domestic health-care sector can consider iShares U.S. Healthcare Sector Index IYH. Given the sector's lack of economic sensitivity, investors seeking a defensive tilt for a broad   Read more 

Bull Case

The portfolio is filled with high-quality, wide-moat firms.
The health-care sector could enjoy a secular tailwind propelled by the aging population.
Utilization rates have turned a corner and are rising, although they still haven’t reached the levels where they were in 2007. Read more 

Bear Case

At 0.43%, this fund's expense ratio is more than double the expense ratio of similar funds from the Vanguard and SPDR families.
The stock prices of health-care companies (drug companies in particular) can be very sensitive to the notion of increased governmental regulation of prices. Tackling the rising expense of health care is increasingly a priority for politicians. If the government enacts policies that reduce profitability across the health-care sector (or among drugmakers in particular), then this ETF will suffer.
This fund invests almost 50% of its assets in its top-10 holdings. Thus, the portfolio's risk and valuation are strongly influenced by just a handful of large-cap stocks. Read more 

Foreign-Stock Exposure Without the Currency Risk 
Watch more 

Premium Membership

View all of our analyst reports with a free trial to Morningstar.com Premium.