Exchange-traded funds tied to the health-care sector have been among the best performers of late, and demographic and technology trends indicate the sector at large could be a profitable place for investors over the long haul.
ETF sponsor IndexIQ signaled its plan to enter this space with its recent registration filing with the Securities and Exchange Commission for the IQ Healthy Hearts ETF, which goes by the ticker symbol HART. The fund will have a net expense ratio of 0.45% and is expected to launch in February to coincide with American Heart Month, an annual federally designated event.
The HART fund tracks the IQ Candriam Healthy Hearts Index, a market cap-agnostic roster of companies from across the globe that are contributing to global health-related goals such as monitoring and curing heart diseases or helping people adopt a healthy lifestyle that limits cardiovascular risks. The index is heavily tilted toward the health-care, consumer staples and technology sectors.
According to the prospectus, the index’s thematic selection criteria reflect initiatives, research and programs of the American Heart Association Inc., a non-profit charity whose mission is fighting heart disease and stroke.
The focus areas include:
• Diagnosis and/or treatment of cardiovascular diseases such as atherosclerosis, thrombosis, heart attack and vascular surgery.
• Manufacturing and distribution of healthy food.
• Manufacturing and distribution of wellness products.
• Providing services allowing people to access information about health and thereby make better informed decision.
• Providing solutions for people to track their fitness and engage in a healthy lifestyle.
Eligible companies are assigned a score between 0-10 based on either the percentage or dollar value of revenue that a company derives from activities relevant to the theme, or a measure of the impact a company’s activity has on the theme.
The index is a collaboration between IndexIQ and Candriam Belgium S.A., a sustainable investing-focused asset manager and affiliate of New York Life Investments, a unit of New York Life insurance Company.
IndexIQ is also owned by New York Life, and it and Candriam have previously joined forces on two IndexIQ ETFs with a focus on environmental, social and governance investing principles.