BetaShares Global Healthcare ETF (ASX: DRUG) is a good way to invest in a defensive global sector.
What BetaShares Global Healthcare ETF looks to do
The ETF aims to invest in a number of the world’s biggest healthcare businesses which can provide both defensive and growing earnings.
Looking at the portfolio, the top 10 holdings are: Johnson & Johnson, Roche Holding, UnitedHealth Group, Novartis, Merck & Co, Pfizer, Abbott Laboratories, Thermo Fisher Scientific, Eli Lilly and Co and Abbvie.
These businesses are some of the world’s biggest with very entrenched market positions. They specialise in different areas of the healthcare world. The biggest company – Johnson & Johnson – has a few different divisions: consumer health products, medical devices and pharmaceutical products. Many other of the large businesses have useful diversification within their businesses.
As you might expect, around two thirds of this ETF is invested in businesses listed in the US. Then 11.5% is allocated to Swiss healthcare shares, 6.9% is allocated to Japan shares, 5.4% is allocated to UK shares, 3.1% is allocated to French shares,
BetaShares Global Healthcare ETF has a fairly low cost for how much geographical diversification you get with it. The annual operating cost is just 0.57% per year. Plenty of active Australian fund managers charge annual management fees of 1% per annum.
There are ETFs out there with much lower fees like Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) which has a management fee of just 0.03% per year. So you need to decide if that extra 0.54% per annum is worth getting the specific exposure to these healthcare giants.
BetaShares Global Healthcare ETF isn’t necessarily going to shoot the lights out over the short term or long term. But I think its returns have been reliable. Over the past three years it has returned, after fees, an average of 10.27% per year.
That’s better than the ASX but not as good as ETFs that are invested across every industry. As an Aussie, I’d rather go for something like iShares S&P 500 ETF (ASX: IVV) for my international diversification.