One of the most compelling arguments favouring an investment in healthcare lies with emerging markets. As these markets grow, their citizens are acquiring Western-style healthcare needs and expectations, with the incidence of diseases such as diabetes and hypertension increasing. This is opening up massive opportunities for pharmaceutical companies.
Yet with the US still dominating the pharmaceutical and biotech industry in terms of spending, most healthcare funds tend to have their investments focused on companies operating in North America.
Db x-trackers MSCI Emerging Markets Healthcare ETF is the exception. This fund offers cost competitive exposure to global healthcare companies included in the MSCI Emerging Market Index. The fund is well diversified geographically with a significant proportion of its assets in emerging markets such as India, China, Brazil and South Africa.
The fund is competitively priced, with a total expense ratio of 0.65 per cent - markedly lower than the active funds offering exposure to the healthcare sector. However, it is worth noting that the fund is denominated in US dollars, which exposes sterling investors to currency risk. The fund is also a very new addition to the exchange-traded funds (ETF) market, having only been launched in May this year, meaning performance data is limited.
Since the ETF's launch it has deviated slightly from its index, the MSCI Emerging Markets Healthcare TRN Index, with a tracking error of -0.09 per cent. The ETF reinvests income and currently has a dividend yield of 0.74 per cent.
| DB X-TRACKERS MSCI EMERGING MARKETS HEALTHCARE TRN INDEX ETF | |||
|---|---|---|---|
| PRICE | US$3.96 | PERFORMANCE SINCE LAUNCH | 2.03% |
| MKT CAPITALISATION | US$37.62bn | TRACKING ERROR | -0.09% |
| LAUNCH DATE | 9 May 2011 | TOTAL EXPENSE RATIO | 0.65% |
| INDEX | MSCI Emerging Markets Healthcare TRN Index | YIELD | 0.74% |
| LEGAL STRUCTURE | ETF | MORE DETAILS | dbxtrackers.com |
| BASE CURRENCY | US$ | ||
Source: db x-trackers
Performance figures as at 8 July 2011
Top 10 holdings (as at 30 June 2011)
| Holding | Percentage (%) |
|---|---|
| Dr.Reddy's Laboratories | 8.57 |
| Aspen Pharmacare Holdings | 8.51 |
| Sun Pharmaceutical Industries | 8.36 |
| Diagnosticos da America SA | 7.72 |
| Celltrion Inc | 6.93 |
| Richter Gedeon | 6.71 |
| Sinopharm Group Co | 6.41 |
| Cipla Ltd. | 5.95 |
| Shandong Weigao Group Medical Plymenr Co | 5.01 |
| Netcare Ltd. | 4.62 |
Geographic breakdown
| Country | Percentage (%) |
|---|---|
| India | 31.62 |
| South Africa | 17.73 |
| China | 15.08 |
| Brazil | 14.97 |
| South Korea | 9.51 |
| Hungary | 6.71 |
| Indonesia | 4.38 |
