Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Vanguard Health Care ETF VHT offers investors exposure to a high-quality portfolio of health-care companies, ranging from pharmaceuticals to medical devices. Given the sector's lack of sensitivity to the overall economic   Read more 

Bull Case

Among health-care ETFs, this fund is a strong choice. Its expense ratio is just 0.14%, and its portfolio is chock-full of high-quality, wide-moat firms.
Our equity analysts expect health-care spending in China to grow meaningfully over the next five to 10 years, as China ages and becomes richer.
The health-care sector could enjoy a secular tailwind propelled by the aging population. Read more 

Bear Case

Health-care stock prices, and drug stocks 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, and if the government enacts new policies that reduce profitability across the health-care sector, this ETF will suffer.
Thanks to its heavy concentration, the fund is heavily leveraged to the pharmaceutical industry's unique risks, such as patent expirations, generic competition, and government regulation.
The fund invests 45.5% of its assets in its top-10 holdings. Thus, the portfolio's risk and valuation are strongly influenced by just a handful of stocks. Read more 

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