Best Sector Of 2018 And Its Hit ETFs & Stocks

Healthcare was the best-performing sector of 2018, having gained nearly 4.7%. The dual tailwinds of encouraging industry fundamentals and the sector’s defensive tilt led to the rally in the sector. The wave of mergers and acquisitions also added to its strength.

Solid Trends

The sector is clearly benefiting from promising drug launches, faster drug approvals, accelerated pace of innovation, the growing importance of biosimilars, cost-cutting efforts, an aging population, ever-increasing healthcare spending, expansion into emerging markets, growing middle class, solid demand for new drugs and Trump’s tax reform. In particular, the new tax legislation has enticed companies to bring offshore cash back home at reduced tax rates, and the repatriated money is being used for share buybacks, dividends, acquisitions, and capital spending.

Defensive Nature

The sector’s non-cyclical nature is an added advantage amid the turmoil in the stock market due to global growth concerns and trade spat between the United States and China. Additionally, the emerging market turmoil, as well as slowing growth in Japan and Europe, led investors’ flight to defensive and stable sectors.

Mergers & Acquisitions

The healthcare sector has been heating up with merger frenzy that could change the landscape of healthcare business. The latest theme in this trend is health insurers trying to consolidate with pharmacy benefits managers to streamline and cut costs in the drug supply chain.

Solid Sector Zacks Rank

The sector boasts a solid rank, which places it in the top 13% of the 16 Zacks Sectors, in terms of ranking. About 92% of industries under healthcare have a Zacks Rank in the top 44%, suggesting a bullish outlook.

Given this, investors might want to tap into the space with the top-performing healthcare ETFs and stocks of 2018. For them, we have highlighted five ETFs and stocks that are poised to perform well in 2019:

iShares U.S. Medical Devices ETF (IHI - Free Report)  

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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