2 Health Care And Biotech ETFs Poised For Robust Returns This Year

 | Jun 09, 2022 09:07

The COVID-19 pandemic highlighted the importance of health care and the role biopharma companies play in drug and vaccine development. As a result, the sector grew tremendously during the past 2 years.

However, with the easing of global coronavirus restrictions, along with a broad market selloff, the fortunes of these companies changed entirely in 2022.

For example, the Dow Jones Health Care Index is down about 9.4% year-to-date—while still returning 3.5% over the past 12 months. On the other hand, the NASDAQ Biotechnology Index has dropped over 20.6% year-to-date (YTD) and 24.8% in the past 52 weeks, meaning it is now in the bear market territory.

In comparison, the S&P 500 and the NASDAQ 100 have lost 13.6% and 22.7% so far in 2022.

Still, these declines potentially offer better entry points into many robust stocks and exchange-traded funds (ETFs) that hold them. So, today's article introduces two ETFs that deserve readers' attention during the rest of the year.

h2 1. Invesco S&P 500 Equal Weight Health Care ETF/h2
  • Current Price: $280.86
  • 52-week range: $267.79 - $322.92
  • 52-week range: 0.65%
  • Expense ratio: 0.40% per year

Health care stocks are typically excellent defensive plays in an environment of high inflation and market volatility. In addition, metrics suggest these companies could further benefit from changing demographics stateside.

For instance, the most recent highlights :

"By 2030, more people in the United States will be older than age sixty-five than younger than age five. Our health care system is unprepared for the complexity of caring for a heterogeneous population of older adults."

Health care spending currently accounts for about a fifth of the national gross domestic product (GDP). As the needs of Americans change and possibly increase, we can expect health care stocks to capture part of that growth as well.

Therefore, the first fund on today's list is the Invesco S&P 500 Equal Weight Health Care ETF (NYSE:RYH). It offers exposure to large- and mid-cap health care companies from the S&P 500 index.