Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Investors seeking high-quality North American health-care companies can consider Health Care Select Sector SPDR XLV. Given the sector's lack of economic sensitivity, investors seeking a defensive tilt for a broad portfolio   Read more 

Bull Case

Among health-care ETFs, this fund is a strong choice. Its expense ratio is just 0.15%, and its portfolio is chock-full of high-quality, wide-moat firms.
Morningstar's equity analysts expect health-care spending in China to grow meaningfully during 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, 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.
This fund invests 53% 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.
The sector is slightly overvalued at this time. Read more 

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