Launched on 05/01/2006, the iShares U.S. Healthcare Providers ETF (IHF) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Healthcare - Providers segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Healthcare - Providers is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
The fund is sponsored by Blackrock. It has amassed assets over $904.19 million, making it one of the larger ETFs attempting to match the performance of the Healthcare - Healthcare - Providers segment of the equity market. IHF seeks to match the performance of the Dow Jones U.S. Select HealthCare Providers Index before fees and expenses.
The Dow Jones U.S. Select HealthCare Providers Index is free-float adjusted market capitalization-weighted index. It measures the performance of the health care providers sub-sector of the U.S. equity market. It includes health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes rehabilitation & retirement centres.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.90%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that 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 24.23% of total assets, followed by Elevance Health Inc (ELV) and Cvs Health Corp (CVS).
The top 10 holdings account for about 76.14% of total assets under management.
Performance and Risk
The ETF has lost about -4.27% and is down about -5.32% so far this year and in the past one year (as of 11/29/2023), respectively. IHF has traded between $241.82 and $279.24 during this last 52-week period.
The ETF has a beta of 0.79 and standard deviation of 17.65% for the trailing three-year period, making it a medium risk choice in the space. With about 72 holdings, it effectively diversifies company-specific risk.
IShares U.S. Healthcare Providers ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IHF is an outstanding 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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.