HHL is a core holding for me, and has been for some time, mainly for income (~10% yield).
I understand the pros/cons of covered call strategies. But given that this ETF is equally balanced with the largest 20 health care companies in the US, I am generally comfortable with it as a holding.
My question is this - what is your macro view of large-cap US health care stocks right now? On the one hand I get excited about the sector when factoring longer-term AI and how this will impact the space. And then I easily get caught up in the headlines that we are all seeing right now from the current administration, and the generally negative impact this is having on the individual stocks in HHL.
Curious for your views on the sector.
Thanks as always.
The healthcare sector is down 0.8% this year. We think the outlook is probably OK, longer term. There are always concerns on spending levels and costs of drugs and treatment. The current administration is determined to drive prices lower. But we doubt the negative sentiment will last that long. It will be interesting to see how the sector does when the market corrects. Its steady cash flow typically means stability and better performance when other sectors turn down. Valuations have changed, and we are still seeing M&A activity. While we might not expect a whole lot this year, we think long term accumulators of the sector will still fare well. Many companies pay dividends while you wait as well. The S&P is at 8.8% health. We doubt investors need that much, but certainly 5% as a representation should be fine for now, with a view to moving up over the next two years or so.