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David England: Time for some healthy ETFs
Column | Eye on the Market

David England: Time for some healthy ETFs

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Last week, I focused on the companies in WCLD-Wisdom Tree Cloud Computing ETF, which tracks the BVP Nasdaq Emerging Cloud Index. These companies have a chance of being high performers now in the months and years to come.

Last month I introduced you to top-performing funds and companies in the biotech and medical device industry. Today, I focus on another popular group in this sector, health care funds, and their top-performing companies.

As I introduce you to new ETFs and their top companies, place them in a watch list portfolio and monitor their performance. Later, I will recap the funds and top companies in this series for opportunities to consider for investing or trading.

EOM Health Care Column 11-21-20.png

My top healthcare exchange traded funds and a brief description are as follows: 

IHF- iShares U.S. Healthcare Providers ETF seeks to track the investment results of the Dow Jones U.S. Select Health Care Providers Index composed of U.S. equities in the health care providers’ sector. This fund focuses on large-cap companies.

PSCH- Invesco S&P SmallCap Health Care ETF track the investment results of the S&P SmallCap 600 Capped Health Care Index. Per the title, this fund focuses on small-cap companies.

SBIO- seeks investment results of the Poliwogg Medical Breakthroughs Index. The Index is comprised of small- and mid-cap stocks of biotechnology and pharmaceutical companies that have one or more drugs in either Phase II or Phase III U.S. Food and Drug Administration.

KURE-KraneShares MSCI All China Health Care Index ETF tracks the performance of the MSCI China All Shares Health Care Index. The fund focuses on large-cap Chinese companies. 

XLV- Health Care Select Sector SPDR ETF tracks the performance of publicly traded equity securities of companies in the Health Care Select Sector Index. This fund focuses on mainly large-cap companies.

Here are the action points: During this timeframe, three funds outperformed and two underperformed the market (SPX). The fund in the last place (XLV) still had a very impressive 50% return during this eight-month timeframe.

Next, I will identify the top companies in IHF- iShares U.S. Healthcare Providers ETF. The top companies and a brief description including the year founded and headquarter locations are as follows: 

HUM-Humana Inc. is a health and well-being company in the United States. Operating in retail, group and specialty, and healthcare services segments. The company offers medical and supplemental benefit plans to individuals. It also has contracts with Centers for Medicare and Medicaid Services. Humana Inc. was founded in 1961 and is headquartered in Louisville, Kentucky.

LH-Laboratory Corporation of America Holdings is an independent clinical laboratory company operating worldwide. It operates in two segments, LabCorp Diagnostics (LCD) and Covance Drug Development. The company was founded in 1971 and is headquartered in Burlington, North Carolina.

HCA-HCA Healthcare, Inc. is a health care services company in the United States. The company operates general, acute care hospitals that offer medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic, and emergency services, and outpatient services. HCA Healthcare, Inc. was founded in 1968 and is headquartered in Nashville, Tennessee.

ANTM- Anthem, Inc. operates as a health benefits company in the United States. It operates through three segments: Commercial & Specialty Business, Government Business, and Other. The company was formerly known as WellPoint, Inc. and changed its name to Anthem, Inc. in December 2014. Anthem, Inc. was founded in 1944 and is headquartered in Indianapolis, Indiana.

UNH-UnitedHealth Group Inc. operates as a diversified health care company in the United States. It operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. UnitedHealth Group Incorporated was incorporated in 1977 and is based in Minnetonka, Minnesota.

EOM IHF Top Companies 11.21.20.png

To see the performance of these top companies compared to the market (SPX), I designed a chart beginning on March 24, to real-time.

Humana took top honors with a fantastic 97% return. Laboratory Corporation of America is up 96%. HCA Healthcare up 94%, Anthem up 90% and UnitedHealth Group is up 82%. The market (SPX)-the green shaded area is up 61%.

Here are the action points: During this timeframe, all five companies outperformed the market (SPX). Four companies outperformed the market by more than 30%. I see tremendous opportunities in this sector and am monitoring these funds and companies, waiting for a pullback. When it happens, I will rely on my Simple Simon buy and sell system to help with my trade decisions.

Take the time to do your due diligence on each fund, which index they track and its holdings. Research each company and determine exactly what they do and how they make their profits. Identify the remaining top companies to see if one may be next to run like HUM, LH, and HCA.

In full disclosure, I do not hold any securities listed.

Plan your work, work your plan, and share your harvest!

David O. England is an investor/trader, financial analyst/educator/lecturer and Associate Professor Emeritus of Finance. This column is for educational purposes only and not intended as financial advice. Past performance does not dictate future returns. Questions? Send to thetraderseye@gmail.com.

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