Even though rhetoric out of Trump’s White House lately has sounded bearish for prescription pill prices, we have seen bullish momentum in the largest Health Care sector fund in the U.S. listed landscape, XLV (SPDR Health Care Select Sector, Expense Ratio 0.15%), as well as substantial inflows this week.
Tacking on more than $1 billion in new assets via creation, XLV is now a $13.5 billion fund and the largest Health Care categorized fund ahead of IBB (iShares NASDAQ Biotechnology, Expense Ratio 0.48%, $8.1 billion in AUM).
Top holdings in XLV are as follows: 1) JNJ (11.59%) 2) PFE (7.42%), 3) MRK (6.44%), 4) UNH (5.79%), 5) AMGN (4.10%), 6) MDT (3.86%), 7) ABBV (3.77%), 8) GILD (3.70%), 9) BMY (3.61%), and 10) CELG (3.50%). As one can see, there are several Big Pharma companies in here like PFE, MRK, ABBV, and BMY, as well as companies that are traditionally seen as “Biotech” like AMGN, GILD, and CELG, in addition to Medical Device companies like MDT and finally a Health Insurer, UNH.
While Trump rhetoric as we have stated has sounded bearish at times, especially as it concerns the prices of prescription drugs, we have on the other hand heard bullish sounding rhetoric in regards to Medical Devices and Technology for instance, where the administration has actively mentioned keeping more of this manufacturing inside of the U.S.
When we look at charts of any of these individual holdings mentioned above, we see a pretty consistent trend in these stocks, and that is a relative breakout to new recent highs in the past couple sessions. This action would agree with the recent inflows we have seen in XLV itself. With XLV trading at its highest levels since early December, it is still challenged around the $71.76-$71.91 level above. That’s where the fund brutally stalled out in mid-November of last year and then proceeded to plunge significantly lower.
It makes sense for us to watch both the Bull and Bear levered products in this space, CURE (Direxion Daily Healthcare Bull 3X, Expense Ratio 0.95%, $169 million in AUM) and the much smaller SICK (Direxion Daily Healthcare Bear 3X, Expense Ratio 0.95%, $1.8 million in AUM), given the potential for XLV to either breakout to new relative highs or perhaps stall in the near term, with only time telling its fortune.
The Health Care SPDR ETF (NYSE:XLV) was trading at $71.79 per share on Thursday afternoon, up $0.33 (+0.46%). Year-to-date, XLV has gained 4.13%, versus a 3.18% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.