Top 10 Healthcare ETFs

 | Jun 20, 2012 12:25AM ET

The Health Care sector as a more defensive sector overall remains a positive holding in 2012 despite volatility in overall markets. Nevertheless, uncertainties surrounding government health care changes and mandates remain a drag as do patent expirations is some key drugs. There is a lot to choose from in terms of indexes linked to ETFs. Some indexes are passive and duplicative relatively while some are “enhanced” making them quasi-active. The latter apply quantitative analytical techniques and skills to provide outperformance. Investors should note that in a rising market particularly ETFs linked to enhanced issues will tend to outperform conventional index linked issues. I’ve not done enough analysis to determine their relative performance during down market periods.

New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab’s ETFs and Scottrade’s Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned.

There is currently an expanding list of 24 ETFs oriented to the healthcare sector with more on the way. The following analysis features a fair representation of ETFs available. We believe from these investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth. Also included are some so-called “enhanced” indexes that attempt to achieve better performance through more active management of the index.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.