Opinions
Dean Orrico
iShares US Healthcare E.T.F.
IYH-N
COMMENT
Jan 25, 2017
$145.780
Stock price when the opinion was issued
E.T.F.'s
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Allan Tong’s Discover Picks IYH stock tracks the Dow Jones U.S. healthcare sector and counts (in this order) Johnson & Johnson (9.05% weight), UnitedHealth Group, Merck, Pfizer, AbbVie, Abbott Labs and Thermo Fisher as its top holdings. IYH stock charges a 0.43% MER and pays a 1.21% dividend yield. Like many of its holdings, IYH stock offers a low beta (0.78). Average volumes are a little light at 69,000, but not a worry. YTD, IYH has climbed nearly 10%. Read NEE Stock and BABA Stock: 3 Savvy Election-proof Stocks for our full analysis.
E.T.F.'s
TOP PICK
The reason isn't that Biden will somehow boost this industry, but that without a Blue Wave the more left-leaning voices of the Democrats (Bernie Sander, Elizabeth Warren) won't have the power to demand healthcare reforms or lower drug prices. You can buy UnitedHealth or AbbVie, but they have popped 10.6% and 6.1% between Nov. 2-5 already. Johnson & Johnson? Thermo Fisher? Abbott Labs. All sound choices, but if you can't select just one, you can fall back on the iShares US Healthcare E.T.F. (IYH-N) which carries all these names, charges an MER of 0.43% and pays a 1.25% dividend yield. Like any ETF, your return won't be as high as some of the names its holds, but you also won't suffer the risk that those names carry. By the way, between Nov. 2-5, IYH rose 6.4%.
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He thinks the drivers behind the healthcare sector are as powerful today as they were 6 months ago. However, the environment has been changing, where you need to be more of an active manager, understanding which asset mix makes sense. This is a passive ETF, so you are subject to the whims of the largest names. You should have exposure to the sector, but try to identify something that is more actively managed.