ETF Research and Analysis

by Ben Johnson, CFA
Suitability
Investors seeking broadly diversified exposure to the domestic healthcare sector might consider iShares U.S. Healthcare Sector Index IYH. Given the sector's lack of economic sensitivity, investors seeking a defensive tilt   Read more 

Bull Case

The portfolio is filled with high-quality, wide-moat firms.
The healthcare sector could enjoy a secular tailwind propelled by the aging population.
Morningstar's equity analysts expect healthcare spending in China to grow meaningfully during the next five to 10 years as China ages and becomes richer. Read more 

Bear Case

At 0.44%, this fund's expense ratio is a multiple of those charged by its closest peers.
The stock prices of healthcare companies (drug companies in particular) can be very sensitive to the notion of increased governmental regulation of prices. Tackling the rising expense of healthcare is increasingly a priority for politicians. If the government enacts policies that reduce profitability across the healthcare sector (or among drugmakers in particular), then this ETF will suffer.
This fund invests 51% 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. Read more 

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