By Dana Jacoby
In 2024, the healthcare sector offers numerous investment opportunities through exchange traded funds (ETFs). Here, Vector Medical Group spotlights some of the most promising investment opportunities across healthcare ETFs in 2024, selected for their robust past performance, strategic holdings, and alignment with current healthcare trends.
1. Vanguard Health Care ETF (VHT)
This is a strategic choice for investors interested in healthcare stocks. It’s a passively managed fund that mirrors the MSCI US Investable Market Health Care 25/50 Index, providing a broad and comprehensive view of the U.S. healthcare market. With over $15 billion in assets, it’s one of the largest healthcare ETFs, reflecting the increased focus on healthcare as an investment area due to trends like aging populations and technological advances in medical care.
VHT stands out with its low expense ratio of 0.10%, making it one of the most cost-effective options in the sector. The fund’s largest holdings include well-established companies such as UnitedHealth Group (8.12%), Johnson & Johnson, and Eli Lilly, accounting for a significant portion of the fund’s total assets. These companies are leaders in their respective areas, providing stability and growth potential to the fund.
Overall, VHT’s diversified portfolio, low costs, and alignment with healthcare investment trends make it a compelling choice for long-term investors seeking exposure to a sector that is essential and continually evolving.
2. Invesco S&P 500 Equal Weight Health Care ETF (RSPH)
This is another attractive option available on the market. This ETF is unique as it tracks the S&P 500 Equal Weight Health Care Index, focusing solely on healthcare-specific companies, including UnitedHealth Group, Centene Corp., and CVS Health Corp.
It manages approximately $847 million in total net assets, and a key feature of RSPH is its approach to equal weighting, which offers a balanced representation across various healthcare companies, avoiding over-concentration in any single stock.
The ETF has shown resilience and adaptability, appealing to investors seeking defensive investment strategies this year. RSPH’s dividend yield of 0.76% and its history of rising dividends also add to its attractiveness.
This fund may be particularly appealing for investors looking for a healthcare investment with a diverse and balanced portfolio.
3. The VanEck Vectors Pharmaceutical ETF (PPH)
Tracking the MVIS US Listed Pharmaceutical 25 Index, this is an ideal choice for focused investment in the pharmaceutical sector, and provides some diversification when compared to the other funds in this list.
Its portfolio, consisting of 26 stocks, offers a targeted approach to pharmaceutical companies engaged in various aspects of the industry, from research and development to marketing. With a substantial asset base of $426.2 million and a daily trading volume indicating good liquidity, this ETF presents a solid investment option.
The 35 bps annual fee is competitive, considering its specialized sector focus. This ETF is suitable for investors seeking medium-risk exposure to the pharmaceutical industry, promising diversification within this specific segment.
Key considerations to remember
When developing a portfolio, it is always recommended to opt for a diversified portfolio, to mitigate risk. Whilst the above are some of the leading healthcare ETFs on the market to date, there is overlap between the stocks they hold and sub-sectors they cover which must be considered. It is also important to remember that while historic trends can be useful to evaluate funds, past performance is not a guarantee of future results.
Getting started
Whether you are a seasoned healthcare investor, or newly entering the sector, there are numerous ETFs on the market that offer excellent growth potential and diversity. When it comes to choosing where to invest, ultimately, the best healthcare funds are the ones that align with your risk appetite, financial goals, values, and interests.
For more insights into healthcare trends, opportunities, and research, visit Vector Medical Group Insights.
Disclaimer: The information does not constitute financial advice or recommendation and should not be considered as such.