"Healthshare" ETFs

In the State of the Union address in January, President Bush outlined a major plan to reduce the number of Americans not covered by health insurance. The portion of the health-care industry in national economy has doubled over the past decade to about 16% of GDP, and if and when President's plan is implemented, this sector would be bound to receive a major boost.

The best way to invest is to purchase one of those health-care ETFs which are already in high demand:
iShares Dow Jones U.S. Healthcare (IHF),
Health Care Select Sector SPDR (XLV),
PowerShares Dynamic Healthcare (PTH),
Rydex S&P Equal Weight Health Care (RYH),
Vanguard Health Care ETF (VHT).

There are also some more focussed ETFs for investment in pharmaceuticals and biotechnology. But nothing can compete in 'narrow-ness' with 5 new ETFs introduced by the New York-based financial-services firm XShares Advisors LLC on the New York Stock Exchange in January. These ETFs are dubbed "healthshares" and each HealthShares basket has about 22 to 25 stocks providing "narrow diversification" to the subsector:
HealthShares Cardio Devices (HHE),
HealthShares Diagnostics ETF (HHD),
HealthShares Emerging Cancer ETF (HHJ),
HealthShares Enabling Technologies ETF (HHV),
HealthShares Patient Care Services ETF (HHB).

These ETFs may most likely appeal to those who already speculate in healthcare stocks or who are already some sort of experts on 'details' of operation of these companies. However, for average investors, the HealthShares ETFs arrive with so much of narrow focus that the advantage of 'diversification' is almost lost. The investor really needs to get involved in researching the healthcare subsectors and companies on week-to-week basis (if not day-to-day) -- something they can almost forget after purchasing one of those broader-scope ETFs. Unless you are a healthcare-geek, we do not recommend such ETFs for your portfolio.