2 Healthcare ETFs That Could Be A Remedy For The Choppy Months Ahead

 | Sep 07, 2020 10:54

The coronavirus pandemic has catapulted healthcare into the spotlight. As individuals and governments battle the virus and its impact on the economy, the importance of healthcare has become clear. This is true now, perhaps more than before as the potential of a prolonged global economic recession weighs.

Meanwhile, volatility has kicked back into broader markets, leaving many wondering: how will market sectors perform in the final stretch of the year?

Since the healthcare sector tends to hold firm during recessions, businesses in the industry may continue to exhibit strength long-term. Below we'll take a deeper look at the sector and two healthcare exchange-traded funds (ETFs) that could offer stability during the months ahead:

h2 Healthcare Trends/h2

The average health expenditure by the Organization for Economic Cooperation and Development $11,172 per person.

Several factors influence the sector. Demographics are changing in countries as nations are aging. A recent report by PWC summarizes:

"By 2030 the world's population is projected to rise by more than 1 billion, bringing the total to over eight billion. 97% of this population growth will come from emerging or developing countries. Equally significantly, people in all regions are living longer and having fewer children. The result is that the fastest growing segment of the population will be the over 65s."

In addition to patient demographics, technological advances also affect costs, employment trends, market entrants and consumer expectations. The new decade is likely to witness a fast-evolving sector.

In July 2020, consultanting firm Frost & Sullivan predicted the pandemic will continue to affect various segments of the industry in different ways. For example, life sciences as well as telehealth will continue to be robust. On the other hand, imaging and medical technologies are negatively effected as patients and health care professionals are delaying many elective procedures.

The coming quarters are likely to show that strong companies will sustain revenue and earnings growth and thus provide value to shareholders. However, it is important to continue to track the sector and make informed investment decisions.

h2 1. The Health Care Select Sector SPDR Fund /h2
  • Current Price: $105.70
  • 52-Week Range: $73.54 - 109.74
  • Dividend Yield: 1.47%
  • Expense Ratio: 0.13 % per year, or $13 on a $10,000 investment

The Health Care Select Sector SPDR Fund (NYSE:XLV) provides exposure to a wide range of companies in the pharmaceuticals, biotechnology, health care equipment and services.