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This Sector Stays Afloat While The Market Sinks


While I was doing some research this morning, I came across some stats that I really couldn’t ignore and wanted to share with you all. Whenever there is a downturn in the market, you’ll hear some industry folks talking about where to best put your money in order to deal with the changing landscape.

For one, they might offer certain ETFs that have some embedded strategy associated with them, or they might point you in the direction of a sector.

Some sectors react to the changing winds much differently than others. As I’m sure you’ve heard me talk about several times throughout these issues, the technology sector is one of the hardest hit, and it makes sense why. From an investor’s point of view, I don’t really want to invest in areas that I am fairly certain are going to struggle.

Tech usually lags when interest rates are being raised and especially when the economy is headed for a recession.

Their burn rates are much higher than and they usually require much more debt than other companies. Given these issues coupled with the cost of labor in this sector, and it’s easy to see why when things are going great, this sector thrives. But when the economy takes a turn, you see the precariousness of their positions.

However, for every sector that is rocked by a slowdown in our economy, there is one that is much more stable.

Healthcare seems to be one of these sectors.

During my research, I saw the Health Care Select Sector SPDR ETF (XLV) was down only 8% year to date. Compare that to the Dow, which is down around 15%, and the S&P 500, which is down closer to 20%. XLV might be thriving in this market by any means, but it’s difficult to beat this market – unless you’re talking about energy stocks.

Nonetheless, healthcare is in fact beating the market, and given the renewed fear of future pathogens and the rise in the number of Monkeypox cases, healthcare names seem to be at the very least deserving of a spot on our watchlists, if not in our actual portfolios.

Today, I decided to compare some of the top healthcare ETFs in order to figure out which one has the best chance of making a difference in my portfolio. The parameters I look for may be different than those you look for, so be careful to listen to your own investing plan.

For me, I want to keep an eye out for a risk-off approach in this kind of market. These results should all have relatively low risk since they are ETFs that index much of the healthcare sector, so we aren’t putting all our eggs in one basket.

As you can see, Magnifi’s compare tool ranks each security based on certain criteria, including risk. Based on the tools findings, my best bet looks like XLV, and that would remain true if I had any other criteria as well.

As you explore new themes and sectors, be sure to play around with the compare tool. Comparative analysis is always better than single-factor analysis because it broadens your perspective.

Feel free to let us know if you have any questions or topics you would like us to discuss in the future simply by emailing us! Send all your questions and requests to discovery@magnifi.com and you might just see them answered in a coming issue!

Today’s feature: Top Performing Healthcare Funds

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