Looking for broad exposure to the Healthcare – Medical Devices segment of the equity market? You should consider the iShares U.S. Medical Devices ETF (IHI), a passively managed exchange traded fund launched on 05/01/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare – Medical Devices is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Blackrock. It has amassed assets over $5.92 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare – Medical Devices segment of the equity market. IHI seeks to match the performance of the Dow Jones U.S. Select Medical Equipment Index before fees and expenses.
The Dow Jones U.S. Select Medical Equipment Index measures the performance of the medical equipment sector of the U.S. equity market.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.47%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector–about 100% of the portfolio.
Looking at individual holdings, Thermo Fisher Scientific Inc (TMO) accounts for about 17.24% of total assets, followed by Abbott Laboratories (ABT) and Medtronic Plc (MDT).
The top 10 holdings account for about 70.60% of total assets under management.
Performance and Risk
The ETF has gained about 1.01% so far this year and it’s up approximately 0.28% in the last one year (as of 05/26/2023). In that past 52-week period, it has traded between $47.07 and $57.17.
The ETF has a beta of 0.85 and standard deviation of 20.61% for the trailing three-year period, making it a medium risk choice in the space. With about 70 holdings, it effectively diversifies company-specific risk.
IShares U.S. Medical Devices ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IHI is a great option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust Indxx Medical Devices ETF (MDEV) tracks INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the SPDR S&P Health Care Equipment ETF (XHE) tracks S&P Health Care Equipment Select Industry Index. First Trust Indxx Medical Devices ETF has $1.99 million in assets, SPDR S&P Health Care Equipment ETF has $533.20 million. MDEV has an expense ratio of 0.70% and XHE charges 0.35%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares U.S. Medical Devices ETF (IHI): ETF Research Reports
Abbott Laboratories (ABT) : Free Stock Analysis Report
Medtronic PLC (MDT) : Free Stock Analysis Report
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
SPDR S&P Health Care Equipment ETF (XHE): ETF Research Reports
First Trust Indxx Medical Devices ETF (MDEV): ETF Research Reports
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