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Designed to provide broad exposure to the Healthcare - Broad segment of the equity market, the iShares U.S. Healthcare ETF (IYH) is a passively managed exchange traded fund launched on 06/12/2000.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $3.06 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. IYH seeks to match the performance of the Dow Jones U.S. Health Care Index before fees and expenses.
The Russell 1000 Health Care RIC 22.5/45 Capped Gross Index measures the performance of the healthcare sector of the U.S. equity market.
Costs
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 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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, Johnson & Johnson (JNJ) accounts for about 9.52% of total assets, followed by Unitedhealth Group Inc (UNH) and Pfizer Inc (PFE).
The top 10 holdings account for about 54.54% of total assets under management.
Performance and Risk
The ETF has lost about -10.26% and is down about -8.75% so far this year and in the past one year (as of 09/08/2022), respectively. IYH has traded between $249.77 and $301.88 during this last 52-week period.
The ETF has a beta of 0.75 and standard deviation of 21.40% for the trailing three-year period, making it a medium risk choice in the space. With about 115 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. Healthcare 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, IYH 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.