Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Investors seeking high-quality North American healthcare 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 healthcare 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.
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.
The healthcare sector should enjoy a secular tailwind propelled by the aging population. Read more 

Bear Case

Healthcare 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 healthcare sector, this ETF will suffer.
This fund invests 55% 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 

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