Exchange-traded funds (ETFs) can make it easy for investors to hold a diverse mix of stocks. And they don't always need to be made up of the same holdings, either. ETFs that rebalance on a regular basis will normally charge more in fees, but they can also ensure that your investment doesn't become stale, full of the same stocks for a long period of time.
The Invesco DWA Healthcare Momentum ETF (NASDAQ:PTH) does a rebalancing on a quarterly basis and contains many of the top healthcare stocks in the world. Plus, the fund factors in relative strength, or momentum, in determining which stocks to hold. Investors don't need to track popular stocks themselves and can leave that to the ETF.
As of March 17, the top holding in the fund was UnitedHealth Group (NYSE:UNH) at 4.9% of the total weight. Other popular healthcare stocks in the ETF include Intuitive Surgical (NASDAQ:ISRG) and Eli Lilly (NYSE:LLY), which each make up about 3% of the fund's weight. In total, there are 41 holdings in the fund, with the life sciences industry accounting for the bulk of the make up of the ETF at 31%.
There are cheaper options than this fund, which has a total expense ratio of 0.67%, but given the frequent rebalancing, it's not an overly expensive fee. Year to date, the fund has fallen 13%, performing a bit worse than the S&P 500, which is down just 6% thus far. However, over the past five years it has been a different story with the ETF rising 149% and outperforming the broader index, which has increased by 88%.
