Healthcare Stocks Lead the Way Up

• Rising rates dampen market sentiment.
• Healthcare stocks lead the way as defensive plays.
• Large cap biopharma remains strong and provides dividends.

Healthcare stocks led the way up 3.44 % over the past week as macro concerns dominate the market. With inflation and energy costs soaring, the Fed ever threatening with higher rates and headlines from the war in Ukraine investors are seeking more defensive positions. Commodities and staples are among sector leaders. Rebalancing your portfolio by sector and good stock picking can provide diversification in a volatile market. Energy and healthcare stocks should be overweighted.

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As you can see from our model healthcare portfolio below our core ETF  pick is the broad-based XLV up 11.98% month to date and 22.42% YTD. And United Health Group (UNH) a leading healthcare services company is weighted heavily in the XLV plus we added another 15 %. The UNH stock is up 8.73% YTD and 49.2% over one year. Another good healthcare ETF to track is the iShares U.S Healthcare Providers ETF (IHF) up 18% over one year and up 9.14% over past month.

Large Cap Biopharma Provides Blockbuster Products and Dividends

Most of our biopharma picks are at or near all-time highs: ABBV, BMY, MRK, PFE, REGN, RHHBY, VRTX. Merck (MRK) a laggard is up 1.4% YTD on the perceived value of its cardiovascular pipeline and the recent acquisition of Acceleron. We will review upcoming earnings and especially guidance of the sector near the end of the month and here is our last summary.

Better returns have been achieved by owning a basket of large cap biopharma stocks rather than any ETF or a fund.

We still like SMID cap biotech stocks as trades but momentum is lacking and the Russell 2000 is weak. Moreover, there was an. avalanche of small cap biotechs from 2020-21 IPOs all of which will need funding. We watch the XBI for strength but alas it is lacking trading in a bear market range.

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