Launched on 01/26/2011, the SPDR S&P Health Care Equipment ETF (XHE) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Medical Devices 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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Medical Devices is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $598.58 M, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Medical Devices segment of the equity market. XHE seeks to match the performance of the S&P Health Care Equipment Select Industry Index before fees and expenses.
This Index represents the health care equipment and supplies sector of the S&P Total Market Index. The Index is one of nineteen S&P Select Industry Indices, each designed to measure the performance of a narrow sub-industry or group of sub-industries as defined by the GICS.The Health Care Index is a modified equal weight index.
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 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.11%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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, Nevro Corp. (NVRO) accounts for about 2.38% of total assets, followed by Align Technology Inc. (ALGN) and Idexx Laboratories Inc. (IDXX).
The top 10 holdings account for about 20.75% of total assets under management.
Performance and Risk
The ETF has gained about 14.01% and is down about -0.19% so far this year and in the past one year (as of 06/14/2019), respectively. XHE has traded between $64.44 and $88.81 during this last 52-week period.
The ETF has a beta of 1.01 and standard deviation of 17.37% for the trailing three-year period, making it a medium risk choice in the space. With about 69 holdings, it effectively diversifies company-specific risk.
SPDR S&P Health Care Equipment ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XHE is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
IShares U.S. Medical Devices ETF (IHI) tracks Dow Jones U.S. Select Medical Equipment Index. The fund has $3.58 B in assets. IHI has an expense ratio of 0.43%.
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.
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SPDR S&P Health Care Equipment ETF (XHE): ETF Research Reports
iShares U.S. Medical Devices ETF (IHI): ETF Research Reports
IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report
Nevro Corp. (NVRO): Free Stock Analysis Report
Align Technology, Inc. (ALGN): Free Stock Analysis Report
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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.