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November was an underwhelming month for main inventory market indexes such because the FTSE 100 and the S&P 500. For the month, these two indexes mainly returned zilch.
There have been loads of areas of the market that carried out properly for buyers in November, nonetheless. Right here’s a have a look at an exchange-traded fund (ETF) in my portfolio that returned 8.4% for the month.
One of the best-performing sector within the S&P 500
The fund I wish to spotlight right now is the Xtrackers MSCI World Well being Care UCITS ETF (LSE: XDWH). It supplies broad, international publicity to the Healthcare sector.
It’s doing rather well in the intervening time as a result of the Healthcare sector is on hearth. In November, it was the best-performing sector within the S&P 500 index by a large margin.
I acquired in on the proper time
Now, I added this ETF to my SIPP again in late October (I highlighted this commerce in an article on 1 November). The rationale I did so was that I wished to diversify away from know-how/synthetic intelligence shares (which have carried out rather well for me however now look a bit of frothy).
This transfer paid off. Whereas tech shares and main indexes have been uneven final month, this ETF mainly went up in a straight line.
Nonetheless price a glance?
Even after its latest good points, I nonetheless imagine it’s price contemplating. To my thoughts, an allocation to healthcare shares is an effective way to diversify a portfolio.
For a begin, healthcare is a defensive sector that has totally different drivers to the tech sector. If tech shares expertise some short-term weak spot (which I believe is an actual risk), capital might stream into this sector.
Second, this ETF provides publicity to some sensible firms. Proper now the, high 5 holdings are:
- Eli Lilly – a pharma powerhouse having lots of success with weight-loss medicine
- Johnson & Johnson – a healthcare large that specialises in oncology and medical know-how
- AbbVie – a lesser identified healthcare firm that specialises in immunology, oncology, and neuroscience
- UnitedHealth – the most important medical insurance firm on the planet
- AstraZeneca – the most important pharma firm within the FTSE 100
Word that with this ETF, an investor will get publicity to lots of thrilling healthcare improvements. Some examples right here embrace weight-loss medicine, robotic surgical procedure, and good glasses.
I’ll be shopping for extra
It’s price declaring that this ETF has an amazing long-term monitor file. During the last 10 years, it has returned about 120% in USD phrases.
One other attraction is its payment construction. Charges are low at simply 0.25% per 12 months (plus any platform costs).
Clearly, the truth that it’s targeted on one sector provides danger. If the Healthcare sector was to expertise some challenges within the years forward, this ETF might underperform.
I see it as an amazing portfolio diversifier although. I plan to purchase extra ETF items for my portfolio within the months forward.
