Among the top year-to-date ETF performers, there is a heavy concentration in health care, according to the latest figures from Standard & Poor's (S&P).
According to S&P 14 of the 16 strongest returns came from ETFs focusing on either the overall sector or a portion of the health care area. The list is led by iShares Dow Jones US Health Care Providers Index Fund (IHF 64 Overweight), with a total return of 17.4%.
Jeffrey Loo, S&P Equity Research's Group Head for Health Care, partially attributes the US sector's relatively strong year-to-date returns through late June to a rebound from underperformance in 2010, when valuations were hurt by uncertainty related to health care reform. "Investors have become more comfortable with and better understand the impact reform has and will have on each of the sector's sub-industries. Indeed, some of the sub-industries anticipated to absorb the brunt of new reform regulations are among the best performing areas," says Loo.
In addition, the managed health care sector is benefitting from lower utilisation rates and moderated cost trends, resulting in healthy cash flows. Loo thinks that pharmaceutical stock performance is benefiting from a favourable view toward cost-cutting measures, substantial share buybacks from large firms, and a relatively low valuation when compared to the S&P 500, explains Loo.
Top ETF performers include Health Care Select Sector SPDR Fund, iShares Dow Jones US Healthc Sector INdex Fund, Vanguard Health Care INdex Fund and iShares Dow Jones US Medical Devices Index Fund.
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