The Health Care Select Sector SPDR Fund (XLV -1.35%) is an appealing choice for investors who want healthcare exposure through a portfolio of established blue chip companies.
The ETF holds 60 stocks, all of which are members of the S&P 500. That means each company has already met minimum standards for size, liquidity, and earnings consistency.
Looking beneath the surface, the portfolio is heavily tilted toward pharmaceuticals, which account for roughly 37% of assets. Healthcare providers and services, including health insurers, make up about 18%, followed by biotechnology at 18%, healthcare equipment and supplies at 16%, and life sciences tools and services at 9%.
The portfolio's composition gives the ETF some defensive characteristics. According to Yahoo! Finance, the fund has posted a five-year monthly beta of approximately 0.58, making it only slightly more volatile than the S&P 500 over that period.
The ETF also offers modest income potential, with a 30-day SEC yield of 1.72%. Cost is another advantage. At a 0.08% expense ratio, it is among the least expensive healthcare sector ETFs available.
