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As we all know, Aging is going to be bigger problem in America where baby-boomers are going to retire in few years. With aging comes the health care of these individuals and the patient spending is going to go over the roof. With all the problems americans face regarding obesity, overeating and eating too much saturated fat, I feel Healthcare spending growth will go up more than the GDP growth and it's time to look at the industry and invest a small portion (5%) of our portfolio.

There are 4 categories within Healthcare industry viz., Pharmaceutical drug companies, Biotech, Medical Device/Equipment companies and Healthcare service providers/Insurance companies. As there are various active groups which track the health care funds such as Large Cap health care funds, Small Cap health care funds, Health Sciences funds - obviously we want to invest in a Healthcare Index fund which tracks the entire industry instead of active funds.

Couple of ETF Funds which comes to mind is Vanguard Health Care ETF (VHT) and ishares Dow Jones Healthcare (IYH) that track broad sector indexes where costs are least expensive. However there are 2 active healthcare funds which has excellent returns and rated high by morningstar viz., Vanguard Health Care (VGHCX) which is closed to new investors and T.Rowe Price Health Sciences (PRHSX) which is run by physician Kris Jenner who has broadly invested in all the categories of health care industry.

Comments, feedback, brickbats, accolades welcome.

LoveIndia,

I have been looking to invest in Health Care and first thing I looked at is VGHCX. I was under the impression that VHT is ETf for VGHCX fund but it's not. VHT portfolio looks completely different. Right now I'm researching both IYH and VHT.

Hey Freespirit
I am new to investment in ETF and will like to know what did you find out on investing in Healthcare ETF. Further, how one can go about finding about which ETF to invest in? Please let me know.

mchatrvd

#1 -- Have you considered this scenario? ---healthcare continues shooting up and finally majority of Americans are not covered by insurance. They simply can not afford it anymore. People start dropping dead on the street as high-tech hospitals wont take them in. They are not bankrupt yet, so can not claim Medicaid. Fed Govt intervenes and introduces National Health Scheme or compulsory insurance in face of strong lobbying from AMA and Pharma lobby. Healthcare stocks and funds take a nosedive.

Dreaming on a friday evening :)

National Health Insurance Scheme will cover only folks who are minimum-wage or low-income holders and NOT for everyone who has already covered by some type of insurance. Even if it so, it has to cover only 20% of Americans that will compliment the existing insurance mess where the health care stocks will further boom.

Not that I am supporting making money by treating patients but will contribute to good cause for stocks like Pharma, BioTech and Medical Device/Equipment companies who act as a good agent for helping the patients recovering from disease.