- The healthcare sector has traditionally been an attractive place for income-oriented investors because of its stable business fundamentals and dividends.
- However, their dividends need to be interpreted under the context of risk-free rates.
- The 10-year treasury rates just touched above 2.5% for the first time since mid-2019.
- The yield spread between healthcare ETFs (such as XLV and VHT) and risk-free rates is currently below the historical mean by a significant margin.
- Our market sector dashboard shows that the small-cap and energy sectors are more attractive compared to their historical spectrum.
For further details see:
XLV And VHT Pressured By Rising Interest Rates