iShares Global Healthcare ETF

IXJ

Market cap $4.47B

The healthcare sector has experienced one of its most significant de-ratings in 35 years, with valuations now at a 30% discount to the broader market. Healthcare trades at historical valuation discounts across multiple metrics.

Healthcare providers and pharmaceuticals/biotechnology subsectors are undervalued versus 11-year averages, with pharma/biotech also showing strong quality metrics. iShares Global Healthcare ETF (IXJ): an alternative to XLV with international diversification and better fundamentals. 10 healthcare stocks cheaper than their peers in October.

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Tough moment for healthcare: low momentum, high volatility, and downgraded EPS. It is evident when looking at the IXJ ETF, focused on global healthcare: 70% US, 30% international. But relative valuations have remained attractive: healthcare trades at a forward P/E in the 30th percentile of the past 30 years' distribution.

IXJ offers global healthcare exposure, capturing demographic shifts and innovation trends beyond U.S.-centric ETFs for a more balanced risk/reward profile. The fund's heavy allocation to pharmaceuticals and biotechnology targets high-growth areas like obesity drugs, oncology, and AI-driven healthcare equipment. Despite a higher expense ratio and currency/regulatory risks, IXJ's global diversification and defensive sector positioning justify its buy rating.

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This article provides a top-down analysis of the healthcare sector using value, quality, and momentum metrics. Healthcare providers and pharmaceuticals/biotechnology are the most compelling subsectors based on value and quality scores. IXJ ETF offers global healthcare exposure but remains concentrated in U.S. stocks and top holdings; it has trailed XLV in long-term returns but is more diversified.

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