One pocket of sector investing that can be easily overlooked is the health care sector, which is typically at the top or near the top of consumer spending and increases year over year. This was amplified during the pandemic. But even post-pandemic, health care continues to be a driver of the U.S. economy and deserves a presence in a diversified portfolio, especially when considering our aging population and shifting demographics.
Representing a large portion of the U.S. economy, the health care industry provides essential care, prescriptions, and services that many lives depend on. Given the increasing demand driven by an aging population, investing in this sector can offer substantial opportunities. The Health Care Select Sector SPDR Fund (XLV) offers access to this valuable part of the economy that touches all.
XLV tracks health care stocks from within the S&P 500 Index, weighted by market cap. The ETF offers broad exposure to core companies in the U.S. health care industry.
The funds top 10 holdings* represent over 50% of the fund. UnitedHealth Group is the largest holding at 9.38%, followed by Johnson & Johnson (8.66%), Eli Lilly (7.12%), Merck (5.38%), AbbVie (5.25%), Thermo Fisher Scientific (4.21%), Pfizer (4.05%), Abbott Labs (3.85%), Danaher (3.37%), and Bristol-Myers Squibb (2.60%).
Oldest Health Care ETF on Market
Launched in 1998, XLV is the oldest health care ETF in the segment and continues to be a go-to tool for advisors and investors. The ETF is used widely for strategic or tactical positions, depending on the portfolio and investor.
With more than $40 billion in assets under management and a low expense ratio of 0.10%**, XLV is actively traded with millions of shares exchanged daily. Since XLV is cap-weighted and selects only from the S&P 500, it tilts heavily toward more stable mega-caps. This open-ended fund tracks the Health Care Select Sector Index.
But what XLV really does is offer easy access to the top names in the industry, including pharmaceuticals, health care equipment and supplies, health care providers and services, biotechnology, life sciences tools and services, and health care technology industries. And packaged in the exchange-traded fund wrapper, XLV offers a diversified approach to investing in the health care sector.
For exposure to the U.S. health care market and the consumer spending behind it, XLV opens the door for advisors and investors of all sizes.
DISCLAIMER: This is a work of research and should not be taken as investment or financial advice. Therefore, Select Sector SPDRs or the publisher is not liable for any decision made based on the publication.
About the Company:
Select Sector SPDR ETFs offer flexibility and customization opportunities. Many investors have similar outlooks, but no two are exactly alike. Select Sector SPDR ETFs let investors select the sectors that best meet their investment goals.
* Holdings, Weightings & Assets as of 7/31/23 subject to change
** Ordinary brokerage fees apply
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market. The index is heavily weighted toward stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The S&P 500 Index figures do not reflect any fees, expenses or taxes. An investor should consider investment objectives, risks, fees and expenses before investing.
One may not invest directly in an index.
Transparent ETFs provide daily disclosure of portfolio holdings and weightings
All ETFs are subject to risk, including loss of principal. Sector ETF products are also subject to sector risk and nondiversification risk, which generally will result in greater price fluctuations than the overall market. Diversification does not eliminate risk.
An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1-866-SECTOR-ETF (732-8673) or visit www.sectorspdrs.com. Read the prospectus carefully before investing.
ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.
Company: Select Sector SPDRs
Contact: Dan Dolan*
Address: 1290 Broadway, Suite 1000, Denver, CO 80203
Country: United States
Email: [email protected]
*Dan Dolan is a Registered Representative of ALPS Portfolio Solutions Distributor, Inc. ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is the distributor for the Select Sector SPDR Trust.
SEL006762 EXP 10/31/23
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