ETFs To Watch As Healthcare Takes the Spotlight

This year, smart-and-balanced investors were able to capitalize on defense spending. For instance, the SPADE Defense Index has beaten the S&P 500 every year since the 2004 election. Moreover, the PowerShares Aerospace & Defense Fund (PPA) which tracks the Spade Defense Index has outperformed the S&P 500 Trust (SPY) rather handily over the last year.

On the 2008 campaign trail, however, military conflict abroad is likely to take a back seat to the economy at home. And perhaps the biggest concern of all may be in the area of health care costs.

If skyrocketing health care costs are going to be handled at the Federal level, might that not hurt for-profit hospitals and Big Pharma? It might.

Still, there's no denying the increasing need for health care products and services by the boomers. That's why you need to look to medical device makers... a segment that stands to thrive with or without "universal healthcare." That's why one should expect diagnostic system developers to profit as a means by which an overall healthcare system can lower costs.

The choices in the exchange-traded fund world are straightforward. The iShares Dow Jones Medical Devices Fund (IHI) continues to widen the gap between itself and the S&P 500 SPDR Trust (SPY).

The correlation/chart pattern between IHI and SPY may look eerily similar. And yet, IHI is a mere 1.5% from its October 9 high. The S&P 500? Closer to 5%.

The HealthShares Diagnostics Fund (HHD) is too new for adequate comparisons to the broader market. Nevertheless, the entire process by which we identify, track and contain diseases is an attractive area for investment, regardless of who occupies the Oval Office.

Comments

[goatfarmer]

A more comprehensive survey of health care etfs would be appreciated, including global healthcare etfs.