A State Street Fund Excels in Rough Year for Healthcare Stocks
The healthcare sector has lagged the broader market, but this State Street fund outperformed its peers thanks to its market cap weighting.


Despite an early 2024 rally, healthcare shares continue to lag the broad market. Over the past 12 months, the S&P 500 Index climbed 22.1%; health stocks, a modest 13.5%. Enthusiasm about artificial intelligence (AI) stocks sapped investor attention from defensive sectors, including health.
Healthcare remains an attractive sector, although it doesn't move as one block. On the plus side, an ongoing post-COVID ramp-up in patients getting surgery and treatment is boosting health-facility stocks.
Weight-loss drugs and their potential to treat other ailments could lift earnings for key drug players for years. The sector even has an artificial intelligence angle, from accelerating drug research to precision medicine therapies. And though aging demographics is an old story, it remains a growth driver for the sector.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Why we chose the Health Care Select Sector SPDR ETF
Last month in the Kiplinger ETF 20, our favorite cheap ETFs to buy, we replaced the Invesco S&P 500 Equal Weight Health Care ETF (RYH) with State Street Global Advisor's Health Care Select Sector SPDR Fund (XLV). Both funds hold the same 63 healthcare stocks, but the Invesco fund gives equal stakes to each firm and gained 5.9% over the past 12 months; the SPDR ETF weights each holding by market value and advanced 13.3%.
Size helped over the past year, and we think that trend will continue. Just 15 health stocks beat the S&P 500 over the past 12 months, and most rank among the largest by market cap. Sector heavyweight Eli Lilly (LLY) soared 78% over the past 12 months; biotech giants Regeneron Pharmaceuticals (REGN) and Amgen (AMGN) gained 45% and 46%, respectively.
By contrast, the rest of the sector was a drag. More than 20 stocks lost value over the past year, led by DexCom (DXCM), down 45%, which makes devices for people with diabetes.
Investors can expect the U.S. presidential election to inject some choppiness into health shares. Firms with strongholds in their businesses and heaps of cash on their balance sheets can best navigate that challenge, say BofA Securities analysts.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Stock Market Today: Stocks Are Mixed Before Liberation Day
Markets are getting into the freewheeling rhythm of a second Trump administration.
By David Dittman Published
-
How to Invest in Sports
If it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
By David Dittman Published
-
Stock Market Today: Stocks Are Mixed Before Liberation Day
Markets are getting into the freewheeling rhythm of a second Trump administration.
By David Dittman Published
-
How to Invest in Sports
If it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
By David Dittman Published
-
Winning Strategies for Financial Advisers as Clients' Lives Evolve
How can the wealth management industry help make life transitions easier for the adviser and the client?
By David Conti, CPRC Published
-
How Advisers Can Establish Relationships With HNW Prospects
These strategies can help to build influence with high-net-worth individuals, who are often looking to an adviser for insight rather than solutions.
By Jeremy Green, CFP®, CTFA, CLU®, CEBS®, AEP®, EA, MSFS Published
-
When Your Car Is Fixed, But You've Still Got the Problem
This reader's experience with trying to get squealing brakes fixed under an extended warranty mirrors what others are experiencing these days.
By H. Dennis Beaver, Esq. Published
-
Stock Market Today: Dow Rises 854 Points From Its Intraday Low
If there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
By David Dittman Published
-
Seven Questions to Ask When Evaluating Personal Loan Options
Taking out a personal loan too hastily could lock you into unfavorable terms with an untrustworthy lender. Ask these questions before signing anything.
By David Kimball Published
-
How Much Does Being Rich Matter in Retirement?
After a certain point, having more money in retirement won't make you any happier, new research shows. Instead, physical health, a sense of purpose, and a minimal amount of non-mortgage debt are more relevant.
By Christy Bieber Published