Canadian investors are often advised to diversify into U.S. healthcare stocks because the Canadian stock market has such a low representation of the sector. And with the loonie having climbed to near-parity with the U.S. dollar, now might be a good time to consider venturing into the U.S. sector.
There are plenty of U.S. healthcare exchange-traded funds (ETFs) to choose from. Chapter 6 in Three Paths to Profitable Investing(2010) by Jeffery Feldman and Andrew Hyman provides an overview and the following list of healthcare with over $100 million (U.S.) in market capitalization.
BiotechiShares Nasdaq Biotechnology Index Fund (IBB) PowerShares Dynamic Biotech & Genome Portfolio (PBE) SPDR S&P Biotech (XBI)
Healthcare (broad-based)iShares Dow Jones US Healthcare (IYH) Health Care Select Sector SPDR (XLV) Vanguard Health Care ETF (VHT)
Medical DevicesiShares Dow Jones US Medical Devices (IHI)
PharmaceuticalsiShares Dow Jones US Pharmaceuticals (IHE) iShares S&P Global Healthcare (IXJ)
The healthcare (broad-based) category is where you can buy the sector in one stop. Within that group is XLV, which has the lowest total expense ratio (0.22%) and by far the highest liquidity (with over 10 million units traded daily — 10 times the second-highest).