"FHLC tracks the MSCI USA IMI Health Care Index, providing exposure to U.S. healthcare companies across pharmaceuticals, biotechnology, medical devices, and health insurance. With an expense ratio of just 0.084%, the fund undercuts many competitors while maintaining over 80 holdings. The return engine is straightforward: capital appreciation from underlying stock holdings plus modest dividend income from mature healthcare companies. However, concentration risk looms large."
"Eli Lilly ( NYSE:LLY) represents over 13% of the portfolio, meaning FHLC's performance has become increasingly tied to GLP-1 obesity drugs. The stock has surged 46% over the past year and trades near its 52-week high. When a single holding approaches one-seventh of your portfolio, you're making a bet whether you intended to or not. The top five holdings also include UnitedHealth ( NYSE:UNH), Johnson & Johnson ( NYSE:JNJ), Merck ( NYSE:MRK), and AbbVie ( NYSE:ABBV)."
FHLC tracks the MSCI USA IMI Health Care Index, offering exposure to U.S. healthcare companies across pharmaceuticals, biotechnology, medical devices, and health insurance. The fund charges a 0.084% expense ratio, holds over 80 names, and generates returns via capital appreciation plus modest dividends. Significant concentration risk exists, with Eli Lilly exceeding 13% of assets and top-five holdings dominated by large-cap drugmakers and insurers. Short-term results have outpaced the S&P 500, but five- and ten-year returns lag materially. Structural sector challenges include drug-pricing pressure, slower innovation outside oncology and rare diseases, and managed-care cost pressures that can weigh on long-term performance.
Read at 24/7 Wall St.
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