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MARKETS LIVE BLOG:

S&P 500 SLIPS BELOW 5,000; NASDAQ SINKS ON TECH DRAG

Nvidia tumbles 10%, Amazon loses more than 2% while Apple ends 1% lower

Should You Invest in the SPDR S&P Health Care Equipment ETF (XHE)?

Zacks Equity Research
·4 min read

Launched on 01/26/2011, the SPDR S&P Health Care Equipment ETF (XHE) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Medical Devices segment of the equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Medical Devices is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $393.87 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Medical Devices segment of the equity market. XHE seeks to match the performance of the S&P Health Care Equipment Select Industry Index before fees and expenses.

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The S&P Health Care Equipment Select Industry Index represents the health care equipment segment of the S&P Total Market Index.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.03%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Butterfly Network Inc. Class A (BFLY) accounts for about 2% of total assets, followed by Shockwave Medical Inc. (SWAV) and Senseonics Holdings Inc. (SENS).

The top 10 holdings account for about 18.06% of total assets under management.

Performance and Risk

The ETF has lost about -25.93% so far this year and is down about -28.94% in the last one year (as of 11/18/2022). In that past 52-week period, it has traded between $79.20 and $121.90.

The ETF has a beta of 0.95 and standard deviation of 29.11% for the trailing three-year period, making it a medium risk choice in the space. With about 82 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P Health Care Equipment ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XHE is a reasonable option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

First Trust Indxx Medical Devices ETF (MDEV) tracks INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the iShares U.S. Medical Devices ETF (IHI) tracks Dow Jones U.S. Select Medical Equipment Index. First Trust Indxx Medical Devices ETF has $1.85 million in assets, iShares U.S. Medical Devices ETF has $6.14 billion. MDEV has an expense ratio of 0.70% and IHI charges 0.39%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SPDR S&P Health Care Equipment ETF (XHE): ETF Research Reports
 
Senseonics Holdings, Inc. (SENS) : Free Stock Analysis Report
 
iShares U.S. Medical Devices ETF (IHI): ETF Research Reports
 
ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report
 
Butterfly Network, Inc. (BFLY) : Free Stock Analysis Report
 
First Trust Indxx Medical Devices ETF (MDEV): ETF Research Reports
 
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Zacks Investment Research