Should you invest in the iShares US Medical Devices (IHI) ETF?
JThe iShares US Medical Devices ETF (IHI) was launched on 05/01/2006 and is a passively managed exchange-traded fund designed to provide broad exposure to the Healthcare – Medical Devices segment of the equity market.
Although they are an excellent vehicle for long-term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency.
Sector ETFs are also convenience funds, offering many ways to gain low-risk, diversified exposure to a broad group of companies in particular sectors. Healthcare – Medical Devices is one of 16 major Zacks sectors within the Zacks Industry classification. He is currently ranked 3, which puts him in the top 19%.
The fund is sponsored by Blackrock. It has amassed assets of over $6.49 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare – Medical Devices segment of the stock market. IHI seeks to match the performance of the Dow Jones US Select Medical Equipment Index before fees and expenses.
The Dow Jones US Select Medical Equipment Index measures the performance of the medical equipment sector in the US stock market.
Expense ratios are an important factor in an ETF’s performance and over the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
The annual operating expense of this ETF is 0.41%, putting it on par with most peer products on the market.
It has a 12-month dividend yield of 0.32%.
Sector exposure and main holdings
It is important to delve into an ETF’s holdings before investing despite the many advantages of these types of funds such as diversified exposure, which minimizes single-stock risk. And most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the largest allocation to the healthcare sector, around 100% of the portfolio.
In terms of individual holdings, Thermo Fisher Scientific Inc (TMO) accounts for approximately 15.42% of total assets, followed by Abbott Laboratories (ABT) and Medtronic Plc (MDT).
The top 10 holdings represent approximately 72.60% of total assets under management.
Performance and risks
So far this year, IHI has lost around -22.91% and is down around -17.91% in the past year (as of 07/13/2022). During this last 52-week period, the fund traded between $47.65 and $67.15.
The ETF has a beta of 0.89 and a standard deviation of 24.69% for the three-year period, making it a medium-risk pick in the space. With approximately 70 holdings, it effectively diversifies company-specific risks.
The iShares US Medical Devices ETF carries a Zacks ETF Rank of 3 (Hold), which is based on the asset class’s expected return, expense ratio, and momentum, among other factors. Thus, IHI is a reasonable option for those seeking exposure to the healthcare ETF sector of the market. Investors could also consider other ETF options in the space.
First Trust Indxx Medical Devices ETF (MDEV) tracks the INDXX GLOBAL MEDICAL EQUIPMENT INDEX and the SPDR S&P Health Care Equipment ETF (XHE) tracks the S&P Health Care Equipment Select Industry Index. The First Trust Indxx Medical Devices ETF has assets of $1.86 million, the SPDR S&P Health Care Equipment ETF has $391.93 million. MDEV has an expense ratio of 0.70% and XHE charges 0.35%.
To learn more about this product and other ETFs, find products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.
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iShares US Medical Devices ETF (IHI): ETF Research Reports
Abbott Laboratories (ABT): Free Inventory Analysis Report
Medtronic PLC (MDT): Free Inventory Analysis Report
Thermo Fisher Scientific Inc. (TMO): Free Inventory Analysis Report
SPDR S&P Health Care Equipment ETF (XHE): ETF Research Reports
First Trust Indxx Medical Devices ETF (MDEV): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.