XBI - THQ Vs. XBI: Keeping The Biotech ETF For Now

2024-01-28 01:00:00 ET

Summary

• The U.S. Healthcare sector has shown strong growth and is projected to continue growing due to the increasing number of Americans entering Medicare.
• The SPDR S&P Biotech ETF invests in biotech and pharmaceutical companies and has a low yield of 0.02%.
• The abrdn Healthcare Opportunities Fund invests in global healthcare companies and has a higher yield of 7.3%, but relies on non-income sources to maintain its payout.
• After reviewing THQ as a replacement for XBI in my portfolio, I am staying with XBI as 10-year CAGRs has XBI slightly ahead. I also like the sub-sector focus XBI provides.

Introduction

Over the past decade, the iShares U.S. Healthcare ETF ( IYH ) only trailed the iShares U.S. Technology ETF ( IYW ) amongst the iShares sector ETFs , granted by a wide margin! Most estimates say 10,000 Baby Boomers enter Medicare each day, with the last of us joining in 2030. As the next chart shows, the number of US citizens over 65 and 85 is scheduled to continue climbing.

Projections are that Americans ages 65 and older will more than double over the next 40 years, passing 80 million by 2040. Adults ages 85 and older will should quadruple by 2040 from the start of the century....

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