The SPDR S&P Health Care Equipment ETF (XHE) was launched on 01/26/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Healthcare – Medical Devices segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 State Street Global Advisors. It has amassed assets over $544.48 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare – Medical Devices segment of the equity market. XHE seeks to match the performance of the S&P Health Care Equipment Select Industry Index before fees and expenses.
The S&P Health Care Equipment Select Industry Index represents the health care equipment segment of the S&P Total Market Index.
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 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.02%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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, Heska Corporation (HSKA) accounts for about 1.90% of total assets, followed by Shockwave Medical Inc. (SWAV) and Irhythm Technologies Inc. (IRTC).
The top 10 holdings account for about 16.08% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Health Care Equipment ETF has added about 4.79% so far, and is up about 7.13% over the last 12 months (as of 05/25/2023). XHE has traded between $79.20 and $104.05 in this past 52-week period.
The ETF has a beta of 0.94 and standard deviation of 26.03% for the trailing three-year period, making it a medium risk choice in the space. With about 82 holdings, it effectively diversifies company-specific risk.
SPDR S&P Health Care Equipment 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, XHE is an outstanding 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 iShares U.S. Medical Devices ETF (IHI) tracks Dow Jones U.S. Select Medical Equipment Index. First Trust Indxx Medical Devices ETF has $2.02 million in assets, iShares U.S. Medical Devices ETF has $5.97 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.39%.
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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