Finding Opportunity in Unloved Healthcare ETFs

Sometimes it feels like it’s Nvidia’s world and we all just live in it. Why bother with anything else? But as calls for diversification get louder as valuations get stretched, it’s a good time to look at where long-term bullish trends meet near-term opportunities. Consider healthcare, for example.

The healthcare sector was a weak performer in 2023. So far this year, it has struggled to keep pace with the broader market. Year-to-date, the healthcare sector as measured by the SPDR Select Sector Healthcare (XLV) is up only about 4.5%, delivering less than half the returns of the broader S&P 500, which is up more than 11%.

SP 500 vs XLV


When we look at healthcare relative to S&P 500 growth vs. value as measured by the SPDR Portfolio S&P 500 Growth ETF (SPYG) and SPDR Portfolio S&P 500 Value ETF (SPYV), healthcare is delivering a lot of value-like performance. In fact, healthcare is looking like a perfect value play at a time when value investing is gathering attention. It could be a way to manage risk and diversify from our die-hard high-growth focus.