Technology

Should You Invest in the SPDR S&P Health Care Services ETF (XHS)?

Designed to provide broad exposure to the Healthcare - Services segment of the equity market, the SPDR S&P Health Care Services ETF (XHS) is a passively managed exchange traded fund launched on 09/28/2011.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Services is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $202.79 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Services segment of the equity market. XHS seeks to match the performance of the S&P Health Care Services Select Industry Index before fees and expenses.

The S&P Health Care Services Select Industry Index represents the health care sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Health Care Index is a modified equal weight index.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 0.18%.

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, Fulgent Genetics Inc. (FLGT) accounts for about 2.16% of total assets, followed by Humana Inc. (HUM) and Laboratory Corporation Of America Holdings (LH).

The top 10 holdings account for about 19.58% of total assets under management.

Performance and Risk

Year-to-date, the SPDR S&P Health Care Services ETF return is roughly 15.84% so far, and was up about 49.94% over the last 12 months (as of 07/26/2021). XHS has traded between $71.29 and $115.63 in this past 52-week period.

The ETF has a beta of 1.08 and standard deviation of 27.64% for the trailing three-year period, making it a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P Health Care Services 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, XHS 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.


Time to Invest in Legal Marijuana

If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.

You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.

Today, Download Marijuana Moneymakers FREE >>

Click to get this free report

SPDR S&P Health Care Services ETF (XHS): ETF Research Reports

Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report

Humana Inc. (HUM): Free Stock Analysis Report

FULGENT GENETIC (FLGT): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Technology Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More