Health stocks had a strong week, with some big firms seeing drugs approved. Eli Lilly (LLY) reportedly neared an agreement to acquire a psychedelics company. United Health Group (UNH) produced a massive earnings beat, appeasing analysts. Meanwhile, Merck (MRK) had a major cholesterol pill approved, as well. ETFs can provide powerful tools to get exposure to some of those names in one place.
Key Takeaways:
- LLY, UNH, and MRK have all seen good news recently, inviting investors to use healthcare ETFs for exposure.
- The ETFs PPH, VHF, and XLV all offer exposure to names like the above, with each providing solid returns around about 25% over the last 12 months.
- Looking ahead, the three funds could help investors get exposure to that good news and diversify away from AI hyperscalers.
LLY’s move to buy psychedelic drug shop AtaiBeckley, for example, has helped boost its stock notably. It is up more than 8% YTD. Meanwhile, UNH’s big earnings have helped it return 25.8% YTD and 3.8% over the last month. Finally, MRK’s big pill approval saw it spike 3.27% on July 16, and 19.9% YTD.
The VanEck Pharmaceutical ETF (PPH ) offers exposure to several names, including LLY and MRK. The strategy charges a 36-basis points (bps) fee to track the MVIS US Listed Pharmaceutical 25 index. The strategy offers specific targeted exposure to pharma, rather than health stocks writ large. PPH has returned 26.6% over the last 12 months.
Other funds to watch include, for example, the Vanguard Health Care ETF (VHT ) which includes all of MRK, LLY, and UNH. VHT charges a nine-bps fee to track the MSCI US IMI 25/50 Health Care index. The fund has returned 24.4% over the last 12 months, per ETF Database data.
Finally, the State Street Health Care Select Sector SPDR ETF (XLV ) also offers exposure to all three of the stocks. Charging eight bps, the fund tracks the S&P Health Care Select Sector index. In doing so, it has returned 21.5% over the last 12 months.
See more: The ETF World Cup: How the Final 4 Single-Nation ETFs Stack Up
Together, those types of healthcare ETFs can be efficient, flexible tools to get exposure to firms like these as they spike. Especially as AI supercharges innovation and markets anticipate rate cuts potentially next year, health care and healthcare innovation can intrigue.
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