Is it worth investing in iShares US Healthcare ETF (IYH)?

Are you looking for broad exposure to healthcare – a broad segment of the stock market? You should consider iShares US Healthcare ETF (IYH), a passively managed exchange traded fund launched on 06/12/2000.

Retail and institutional investors are increasingly turning to passively managed ETFs because they offer low costs, transparency, flexibility and tax efficiency; these types of funds are also a great tool for long-term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a wide range of companies in specific sectors. Healthcare – Broad is one of the 16 broad Zacks Industry Sectors. He currently ranks 7th, putting him in the top 44%.

Index details

The fund’s sponsor is Blackrock. It has accumulated more than $3.26 billion in assets, making it one of the larger ETFs trying to match the performance of the broad segment of the Healthcare stock market. IYH strives to match the performance of the Dow Jones US Health Care Index before fees and expenses.

The Russell 1000 Health Care RIC 22.5/45 Capped Gross Index measures the performance of the health care sector in the U.S. stock market.

Costs

Investors should also pay attention to an ETF’s expense ratio. Lower-cost products will produce better results than higher-cost ones, assuming all other metrics remain the same.

The annual operating costs of this ETF are 0.40%, making it one of the cheaper products on the market.

Its trailing 12-month dividend yield is 1.16%.

Sector exposure and largest assets

Although ETFs offer diversified exposure that minimizes the risk of a single stock, investors should also look at the fund’s actual holdings. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the Healthcare sector – approximately 100% of the portfolio.

In terms of individual holdings, Eli Lilly (LLY) holds about 11.72% of total assets, followed by Unitedhealth Group Inc (UNH) and Johnson & Johnson (JNJ).

The 10 largest holdings account for approximately 53.73% of total assets under management.

Performance and risk

Year-to-date, the iShares US Healthcare ETF has increased by approximately 4.12% so far, and has increased by approximately 11.73% over the last 12 months (as of May 30, 2024). Over the last 52 weeks, IYH has traded between $51.45 and $61.96.

The ETF has a beta of 0.69 and a standard deviation of 14.45% for the trailing three-year period, making it a medium-risk pick in this space. Holding approximately 116 shares, it effectively diversifies company-specific risk.

Alternatives

The IShares US Healthcare ETF carries a Zacks ETF Rank of 3 (Hold), which is based on asset class expected return, expense ratio and momentum, among other factors. So IYH is a reasonable option for those looking for exposure to the healthcare ETF market. Investors may also want to consider other ETF options in this area.

Vanguard Health Care ETF (VHT) tracks the MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks the Health Care Select Sector Index. The Vanguard Health Care ETF has $17.32 billion in assets and the Health Care Select Sector SPDR ETF has $38.12 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.

Bottom line

To learn more about this product and other ETFs, find products that fit your investment goals, and read articles on the latest developments in the world of ETF investing, visit the Zacks ETF Center.

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