Looking for broad exposure to the Healthcare – Broad segment of the equity market? You should consider the Vanguard Health Care ETF (VHT), a passively managed exchange traded fund launched on 01/26/2004.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Vanguard. It has amassed assets over $16.80 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare – Broad segment of the equity market. VHT seeks to match the performance of the MSCI US Investable Market Health Care 25/50 Index before fees and expenses.
The MSCI US Investable Market Health Care 25/50 Index is made up of stocks of U.S. companies within the health care sector.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.42%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector–about 100% of the portfolio.
Looking at individual holdings, Unitedhealth Group Inc. (UNH) accounts for about 8.21% of total assets, followed by Johnson & Johnson (JNJ) and Eli Lilly & Co. (LLY).
Performance and Risk
The ETF has lost about -1.82% and is up about 2.24% so far this year and in the past one year (as of 09/11/2023), respectively. VHT has traded between $223.70 and $255.96 during this last 52-week period.
The ETF has a beta of 0.72 and standard deviation of 15.68% for the trailing three-year period, making it a medium risk choice in the space. With about 416 holdings, it effectively diversifies company-specific risk.
Vanguard Health Care ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VHT is an excellent option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares Global Healthcare ETF (IXJ) tracks S&P Global 1200 Healthcare Sector Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. IShares Global Healthcare ETF has $3.98 billion in assets, Health Care Select Sector SPDR ETF has $40.17 billion. IXJ has an expense ratio of 0.42% and XLV charges 0.10%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report