The year’s hottest ETFs, not including those tracking green energy, have been ones consisting primarily of biotech stocks. Precisely why is hard to say. Some might speculate that the risk-on environment in equities markets for much of the year has allowed more investors to make risky biotech plays that are prone to pretty big swings. However, regardless of why, the biggest biotech ETFs are on a pretty strong run.
And healthcare ETFs could make for pretty interesting plays over the coming months/years. Regardless of how one feels about Obamacare, it’s clear that it’s going to be a major part of the healthcare sector for at least the near-term future. Whether it crashes out spectacularly or ultimately overcomes its early stumbles to cement itself onto American society (or, most likely, somewhere in between), health insurers, pharmaceutical companies, and even nursing homes are likely to experience great change.
And with that change could come great volatility. The sort that can make traders drool. However you see Obamacare playing out, there’s probably a play in it for the healthcare sector. And one of the best ways to make that play may be with healthcare ETFs tracking equities in the sector. Here’s a few of the different options. And, for reference, the S&P 500's YTD performance is currently at 23.56 percent.
SPDR Health Care Select Sector Fund ($XLV)
Tracks: Health Care Select Sector Index
YTD Performance: 32.72 percent
Play: This SPDR fund is a broad play made up of a variety of types of companies from across the sector.
iShares Nasdaq Biotechnology Index Fund ($IBB)
Tracks: Nasdaq Biotechnology Index
YTD Performance: 49.99 percent
SPDR S&P Biotech ETF ($XBI)
Tracks: S&P Biotechnology Select Industry Index
YTD Performance: 35.81 percent
Play: A similar biotech play to IBB, but one tracking an index with fewer companies.
SPDR S&P Pharmaceuticals ETF ($XPH)
Tracks: S&P Pharmaceuticals Select Industry Index
YTD Performance: 40.12 percent
Play: Focused play of pharmaceutical companies listed on the S&P 500.
iShares Dow Jones U.S. Medical Devices Index ($IHI)
Tracks: Dow Jones U.S. Select Medical Equipment Index
YTD Performance: 32.46 percent
Play: Made up almost exclusively of medical device makers. Watch the news for reports about the future of the controversial medical device tax included in the Affordable Care Act as the outcome there could prove important for this industry.
iShares Dow Jones U.S. Health Care Providers Index Fund ($IHF)
Tracks: Dow Jones U.S. Select Health Care Providers Index
YTD Performance: 28.27 percent
Play: This includes some of the nation’s largest insurers, and could be a way to bet on their success/failure in the new health insurance marketplaces.
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