BlackRock Singles Out Health Care as Its ‘Largest Overweight’ Position

December 06, 2022

BlackRock’s Chief Investment Officer of U.S. Fundamental Active Equity Tony DeSpirito highlighted health care as a resilient sector in a recessionary environment, describing it as their “single largest overweight position” in an interview with Bloomberg Television on Monday. 

DeSpirito, who also serves as one of the lead portfolio managers at the New York-based asset manager, attributed the industry’s strong performance to a trifecta of reasons: “better long-term prospects, good recessionary prospects and better valuations.” 

Sector-focused exchange-traded funds offer exposure to companies in specific subdivisions and can help investors pursue profit without high risks. Assets under management among State Street Global Advisors' SPDR suite of sector-focused funds rose to $237.4 billion at present from $137 billion in 2017. 

“The next 10 years will see similar progress in neuroscience, with the iShares Neuroscience and Healthcare ETF (IBRN) targeting that advancement,” said Head of U.S. iShares Megatrend and International ETFs Jeff Spiegel in an email to ETF.com. 

IBRN, which launched in August, posted a three-month total return of 13.65%. So far this year, the First Trust Nasdaq Pharmaceuticals ETF (FTXH) is the best-performing ETF in the health care sector, with a 4.77% return. 

Spiegel also added that the market is currently missing out on a lot of progress in the health care sector, which is currently front-loaded, meaning that new medical products in phase 2 and phase 3 trials right now are “set to deliver near-term, and likely explosive, revenue.” 

Further Growth Ahead 

The latest comments are consistent with BlackRock’s 2023 thematic outlook report published in November, which noted that investment opportunities in health care have continued to grow due to innovation across genomics, immunology and neurology fields. The report also said the inelastic demand for health-care-focused products signaled further growth over the course of the next few years. 

There are currently 61 health care ETFs traded on the U.S. markets currently, with AUM of over $103 billion, collectively, according to ETF.com data.  

The largest health care ETF is State Street’s Health Care Select Sector SPDR Fund (XLV), which tracks health care stocks from within the S&P 500 Index, providing exposure to companies in pharmaceuticals, health care equipment and supplies, health care providers and services and more. The fund has $42.14 billion in assets. XLV posted year-to-date returns of 0.33%. 

 

Contact Zoya Mirza at [email protected] 

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