ETF Update: Healthcare, Africa's Impact on Water ETFs, Energy ETFs
Health Care ETFs Could Use A Check-Up
As the presidential elections are only months away, a big issue on the minds of U.S. citizens is the state of the health care industry, the quality of the care we receive, and how any decisions made will affect ETFs.
The United States spends heavily on health care, especially in contrast to other industrialized countries, but is it actually worth the expense?
A recent report by the Commonwealth Fund highlighted the contrast between the health care system in America compared to those in other nations of industry. The results indicated that the United States spends twice as much as other countries, while the quality is certainly questionable. Some 75 million people are thought to be without sufficient health care or any at all. We’re in last place among those countries in preventing deaths through effective medical care.
Reed Abelson for The New York Times reports that while the presidential candidates both emphasize the need for a shift within our health care system, business leaders and professionals also express a dire need for a huge change.
Much of our system is flawed because of inefficiencies such as administrative costs of medical insurance systems. Privatizing insurance would play a significant role in this.
Pharmaceuticals also took a hit yesterday after Schering-Plough and Merck’s cholesterol drug Vytorin wasn’t shown to reduce the risk of major heart valve problems, according to a study. It was no better than a placebo, reports the Associated Press. The Pharmaceutical HOLDRs (PPH) were lower on the news. Year-to-date, the fund is down 11.2%. Schering Plough (SGP) is 3.9% and Merck (MRK) is 11.8%.
Meanwhile, ETFs that are in need of healthy changes:
- Vanguard Health Care (VHT), down 9.1% year-to-date
- Health Care Select Sector SPDR (XLV), down 9.4% year-to-date
- iShares Dow Jones US Health Care Sector Index Fund (IYH), down 8.6% year-to-date
Africa’s Tough Decisions About Food or Water Help Certain ETFs
In Africa, the population is struggling with a life-or-life dilemma that could help infrastructure, agriculture and water-related ETFs.
For years, the countries in North Africa have drained aquifers, sucked the salt from seawater and diverted the Nile River in order to make deserts bloom, says Andrew Martin for The New York Times. The projects to do so were so expensive that importing food was more practical, and today, some countries import at least 90% of their staples.
The global food crisis today is making that a whole lot less practical, and those countries are rethinking the old ways they’ve done things.
The population of this region has more than quadrupled since 1950, to 364 million, and is expected to reach 600 million by 2050. That’s going to cut heavily into an already-scarce water supply.
Since the world markets can no longer be as relied-upon, the countries are developing new and expensive schemes to maintain the food supply. One country is growing rice in solar-powered greenhouses, fed by groundwater and cooled with seawater. The project has been called by a World Bank economist as “probably the most expensive rice on earth.”
This New York Times image shows that the fastest-growing places on earth are also among the world’s driest areas, further putting a crimp on supplies.
(Click for a larger version)
As these countries work to find cost-effective solutions to the problem of rising costs and dwindling resources, some ETFs might see their numbers shift, including:
- iShares S&P Global Infrastructure (IGF), down 15.2% year-to-date
- Macquerie/First Trust Global Infrastructure/Utilities Dividend Income Fund (MFD), down 19.4% year-to-date
- PowerShares Water Resources (PHO), down 4% year-to-date
- Claymore S&P Global Water (CGW), down 11.2% year-to-date
- MLCX Grains Index (GRU), down 4.4% year-to-date
- PowerShares DB Agriculture (DBA), up 12.4% year-to-date
Money Pulls Out of Energy ETFs After Oil Sinks
Last week’s drop in oil prices led to money shifting away from energy-related ETFs.
And, of all places, investors appear to be putting it into financials.
As crude oil fell below $130 a barrel on Friday, the Energy Select Sector SPDRs (XLE) tumbled to a four-month low, reports Trang Ho for Investor’s Business Daily. XLE is down 2.8% year-to-date. One expert suggests that investors turn an eye to oil exploration funds instead, which aren’t as highly pegged to the price of oil.
Two such funds are the PowerShares Dynamic Energy Exploration & Production (PXE), which is up 2.9% year-to-date, and SPDR S&P Oil & Gas Equipment & Services (XES), which is up 12.4% year-to-date. While XLE is 100% allocated in energy, XES and PXE are mostly in energy with a little industrial materials and/or consumer services thrown in, as well.
Oil is off to a volatile start for this week. In early trading, prices rose more than $3 on worries about Iran’s nuclear program, as well as a storm in the Gulf of Mexico. They then pulled back to below $130, reports Peter Graff for Reuters.
It’s hurricane season, which might cause some volatile movements in the next few months as storms threaten various oil fields.
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This article has 3 comments:
- john s. gordon
- 529 Comments
Jul 22 10:08 AM> jack
- jegan ;-)
- 672 Comments
Jul 22 02:40 PMWe are at a crossroads on many topics wherein the same old bandage approach no longer stems the aortic flow.
Thx jegan ;-)
- jegan ;-)
- 672 Comments
Jul 22 02:41 PM