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
-
A Department of Labor rule adopted under the Biden administration had many brokers worried about their ability to work as independent contractors. A new proposal would roll it back.
February 27 -
The financial advisory firm initially sought an industrial loan charter back in 2020. It's the third company to receive the necessary approvals this year, joining General Motors and Ford.
February 27 -
Private equity in 401(k)s may face significant liquidity strains, reducing returns and complicating plan management, according to new Morningstar research.
February 27 -
A new report from Cerulli Associates shows older, affluent investors are far more skeptical of AI use than their younger counterparts. Financial advisors who use AI tools in their practices say transparency is key to setting wary clients at ease.
February 27 -
Keep your general knowledge skills sharp while earning an hour of CE credit toward maintaining industry certification by taking Financial Planning's latest continuing education quiz.
February 27 -
RBC Wealth Management-U.S. sees a 12% surge in assets under administration — thanks largely to skyrocketing market gains.
February 26





