The second quarter earnings season has generally been regarded
as better than average, with 446 of the 500 companies within the
S&P 500 Index having reported thus far.
According to recent
FactSet research data
, 73 percent have reported earnings above mean estimates and, on
average, companies are beating expectations by 4.2
Coal ETF Pursues New Uptrend
However, one sector in particular has bounded ahead of its
peers, and related ETFs are cashing in. Health care companies have
been one of the shining stars of the market this year and continue
to show impressive relative strength.
data compiled by Bloomberg
, "Ninety percent of healthcare companies have exceeded analysts'
profit forecasts so far this reporting period, while 88 percent
reported revenue that beat estimates."
Confidence In Further Potential
That fundamental strength has been a catalyst for investors to
pile into funds such as the Health Care Select Sector SPDR (NYSE:
). Through August 12, the ETF has garnered more than $1 billion in
net inflows as a result of confidence in further profit
This health care benchmark tracks 55 large-cap companies engaged
in pharmaceuticals, biotechnology and medical services. The largest
holdings in the Health Care Select Sector SPDR include Johnson
& Johnson (NYSE:
) and Pfizer Inc (NYSE:
), which together control more than 20 percent of the assets in
this market-cap weighted fund.
The Health Care Select Sector SPDR is the dominant ETF in the
healthcare sector with more than $10 billion in total assets, and
it charges an expense ratio of 0.16 percent annually.
So far this year, the ETF has gained 9.77 percent, compared to
the 5.61 percent total return of the SPDR S&P 500 ETF (NYSE:
This outperformance may be another reason asset flows have
continued to chase into the health care sector. So far this
year, the Health Care Select Sector SPDR is trailing only the
Energy Select Sector SPDR (NYSE:
) $2.6 billion net inflows in large-cap sector offerings.
The next test for health care will be whether summer volatility
will continue to weigh on stocks or if this mini-correction has run
its course. A resumption of the uptrend may provide further
confirmation for the health care theme.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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