Healthcare Sector Outperforming: 5 Best ETFs & Stocks QTD

Healthcare, which registered its second-worst performance among the 11 major S&P 500 sectors this year, bounced back with an outperformance starting the fourth quarter. This is primarily owing to successive positive news including trial results, deal activities and better-than-expected earnings. Further, uncertainty over trade lent a boost to the sector given its non-cyclical nature, which in turn, provides a cushion to its portfolio.

Moreover, the sector is clearly benefiting from encouraging trends including new drug approvals, an accelerated pace of innovation, promising drug launches, growing importance of biosimilars, cost-cutting efforts, an aging population, expanding insurance coverage, the rising middle-class, insatiable demand for new drug, and an ever-increasing health care spending.

Additionally, the health care sector is placed at the top 7% of 16 Zacks sectors with more than 80% of the industries having a top Zacks Industry Rank. This indicates optimism surrounding the sector.

In light of this, we choose five healthcare ETFs and stocks that are leading the market so far this quarter. These could be excellent plays for investors if similar trends continue.

Virtus LifeSci Biotech Clinical Trials ETF (BBC - Free Report) — Up 23.2%

This fund has a novel approach to biotechnology investing with exposure to companies that are in the clinical trial stage. This can easily be done by tracking the LifeSci Biotechnology Clinical Trials Index. BBC has amassed $26.1 million in its asset base and charges 79 bps in fees per year from its investors. It trades in a light average daily volume of around 4,000 shares and holds 95 securities in its basket. The product carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.

iShares U.S. Healthcare Providers ETF (IHF - Free Report) — Up 19.3%

This ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics, and specialized treatment. In total, the fund holds 49 securities in its basket. The fund amassed $847.9 million in its asset base, while volume is moderate at about 65,000 shares per day on average. It charges 43 bps in annual fees and has a Zacks ETF Rank of 3 with a Medium risk outlook.

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