Long-term Investing in healthcare sector

 


Hello folks!

Hope all is well! Seems like COVID cases are creeping up slowly again in NYC and in several European countries. I hope we get a vaccine soon enough to prevent the pandemic repeating itself. The good news is that many large pharma companies are in advanced stages of vaccine development and increased their research & development spending to speed it up. Overall, in most countries across the world there is additional investment going on to improve the healthcare system. I think this is a good time to either start investing or increase investing amount in health care sector. In genera, healthcare sector is quite diversified in terms of types of companies involved. The list includes pharmaceuticals, medical equipment supplier, hospitals, Insurance providers and retail stores like CVS. 

My main vehicle for investing in this sector is Vanguard healthcare etf (VHT). This etf is quite diversified with holdings of about 431 companies. It has some of the largest pharma companies as major holding including Johnson & Johnson, Pfizer, Merck’s etc. It is also diversified across several sectors in health care.

Here is quick summary of sector exposure and top ten holdings


Another aspect of this etf I like is how consistent it is in long term return. Since the inception from 2006, it returned on average 10% annually. You can see how 10,000$ invested in 2010 is worth now!


The current expense ratio is just 0.1% and has a decent dividend yield of 1.3%. So even in down market, that dividend will be pouring back in my account.

Only negative point of this etf is slight higher P/E ratio or 25. However considering the long term potential, I would not mind adding it in my portfolio.

That’s all for today!

 

Disclaimer: This article shows my personal opinion and it’s for entertainment purpose only. This is no way professional financial advice. You may seek professional advice or conduct own research before investing. This site uses affiliated links and cookies. Please read the disclaimer & Privacy section for details.

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