Despite their recent and considerable underperformance, market analysts stress the need for clients to evaluate health care equities by their long-term returns.
"The underlying story behind health care is strong," Morningstar analyst Robert Goldsborough says. "Despite health care reform, there is a lot arguing broadly for health care."
Although they all posted negative returns in the past year, the sector's five leading ETFs beat the three-, five- and 10-year performance numbers of the S&P 500, according to Morningstar.
The broad-based index posted annualized gains of 11.95% over three years, 11.73% over five years and 7.10% over 10 years. The one-year return amounted to a gain of 0.76%.
The sector's top ETF performer during the past five years, PowerShares Dynamic Pharmaceuticals (PJP), illustrates the long-term growth trend for health care equities. Although the fund posted a one-year loss of 14.74% through April 25, it also enjoyed a five-year return of 22.98%.
The sector's largest ETF, the $12.76 billion Health Care Select Sector SPDR (XLV), incurred a one-year loss of 2.28% but returned nearly 10.73% return over the past 10 years.
For this list, we considered all health sector ETFs and ranked them by their five-year annualized returns.
All data from Morningstar.
This story is part of a 30-30 series on smart ETF strategies. A version of this story was originally published on March 15.
2
-
Generation Z is favoring Roth accounts like no generation before, new Fidelity research shows. Here's why younger investors are betting on post-tax retirement savings.
51m ago -
Falling client risk tolerance and domestic turmoil may mean that these international equity funds could be more attractive to investors looking for diversification.
1h ago -
Wells Fargo recruits a $543M JPMorgan team, Raymond James adds a $360M family practice and Beacon Pointe acquires a women-led RIA.
4h ago -
Glide paths may not deliver the highest returns, but experts say they account for behavioral limits that other strategies overlook.
November 19 -
This year the top three firms in FP's exclusive study of RIAs that do not do any commission business manage nearly $120 billion combined.
November 19 -
Firms might not be able to untangle the web's interconnected services, but they can think ahead and duplicate servers and data to prepare for the next outage.
November 19





