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The 7 Deadliest Words Of Investing And Why You Are Not Smarter Than The Average Bear

Summary Stay away from these 7 deadly words that we tell ourselves. See how investors can be classified into three types of lemmings. Discover a simple concept of what valuation really is to an investor. I’m a valuation nut. The methods I choose are not perfect because valuation involves art and science. But then again, what is the perfect valuation method? There’s no such thing. And that’s difficult for many people to grasp because we are taught to do things the “right” way, a “certain” way. One of the most difficult things with investing and any form of valuation is that there is no step by step guide. In any other industry there’s a clear process that you can follow from start to finish to accomplish a task Ikea furniture assembly instructions Photography tutorials How to tie a tie Learning to hang glide and so on But investing is like a choose your own adventure book that I loved to read growing up. A choose your own adventure book is one where you come to a section of the book and then get to choose which adventure you want to take. Depending on your choices, the ending is different. When it comes to investing, there is no clear single method of doing things and it can overwhelm, and frankly, freaks out some people. Instead of a straight path from A to B, the waves of decisions and new information you have to take in requires lots of work. And it’s too much for many people. That’s why you always see people asking strangers what their thoughts are on a stock they hold. But the truth is that people can invest successfully. People can value stocks properly. You’re just led to believe you can’t. It’s just that there are a ton of blogs, news and articles that discuss complex ideas, causing people to simply walk by obvious low risk ideas. I call these low hanging fruits. Bloggers, news reporters, financial analysts all want to write about the hard stuff to get recognized. The complex deals. Who wants to write about how a small, well run, industrial niche company in Nashville, with a 70 year long heritage that continues to gain business and generate cash when less than 400 people on the Internet will read it? Instead they could be writing about how Tesla (NASDAQ: TSLA ) is reinventing the auto industry and revolutionizing a new energy era, poring over PHD words and speculating about what the future could bring. It could go viral and look good on their writing stats. But… You’re led to believe that they must know something that you don’t. The 7 Most Deadly Words in Investing This is a video that I refer to now and then when I need to clear my head or when I start second guessing myself. I’ve marked the video to start from 1:57. Watch the next 2 minutes to around the 3:50 mark. Did you catch those 7 deadly words? They must know something that you don’t. If seasoned professionals fall into this trap, how much easier is it for regular investors to tell themselves the same thing? Especially when they read or hear people they regard as more intelligent as themselves disagreeing with their analysis and valuations. If you didn’t or can’t watch the video above, Prof Aswath Damodaran lays out a simple example that I certainly relate to. You value a company. Say you come up with a value of $50 per share. Let’s say the company is Amazon. Stock is trading at $278. One of the great stocks of the last decade. Your rational side is saying, “don’t buy that stock, it’s expensive”. But then you hear a voice at the back of your head. “They must know something that you don’t”. And when you hear that voice, magical things happen to your valuation. Your cash flows increase, your growth rates go up, your discount rates go down, $50 becomes $100, $100 becomes $150, and before you know it, guess what? You’re at $275, $300, justifying your need to buy. 3 Types of Lemmings Damodaran continues on to group investors into 3 groups of lemmings. After all, we are all lemmings to some degree. There is no such thing as a pure contrarian, because that just means you are a contrarian just for the sake of being a contrarian. Lemming #1: The Proud Lemming These are just momentum investors who are proud of following what’s hot. They don’t care what the company is or does. They look for a crowd and buy and sell whatever is being bought or sold. Lemming #2: The Yogi Bear Lemming Yogi Bear’s tagline is “smarter than the average bear” and it refers to the investors who like to think that they are able to pull out of a stock just before it crashes. The problem is that most people claim they are smarter than the average bear, but rarely are they able to jump ship of a momentum train before it crashes. If Isaac Newton, the father of advanced mathematics and mechanics couldn’t handle the charts, market and lemming fever, I have serious doubts about most of us. Isaac Newton Became a Lemming ( Photo Credit: Safal Niveshak ) Lemming #3: The Lemming with a Life Vest Valuation is simply a life vest. A compass. It’s something for you to hang onto when everyone else is doing something else. Buffett knew that dot com stocks were at stupid valuations in 2000 and held onto his life vest when Barron’s basically called him “old”. After more than 30 years of unrivaled investment success, Warren Buffett may be losing his magic touch. … To be blunt, Buffett, who turns 70 in 2000, is viewed by an increasing number of investors as too conservative, even passe. Buffett, Berkshire’s chairman and chief executive, may be the world’s greatest investor, but he hasn’t anticipated or capitalized on the boom in technology stocks in the past few years. Indeed, Buffett has even started taking flak on Internet message boards. One contributor called Berkshire a “middlebrow insurance company studded with a bizarre melange of assets, including candy stores, hamburger stands, jewelry shops, a shoemaker and a third-rate encyclopedia company [the World Book].” – Barrons I just love how Damodaran puts it because it’s exactly how I process it. Valuation slows the process down, gives your rational side a chance to mount an argument. Valuation is Simple. Don’t Complicate It. When you value stocks, you miss out on hundreds of opportunities. Most growth stocks go out the window. Forget about Tesla. Most investors don’t want to hear about valuation because it challenges their desire to hear what they want. But I love valuation and it’s the reason why the OSV Analyzer came to life in the first place. I love it and over 800 members have made great use of it because when facts and numbers over the past 5 years or 10 years are smack in front on your face, it’s difficult to trick yourself. Unless I can find a reason for why I have to increase my valuation from $50 to $300 without solid evidence, it’s easy to recognize I’m fooling myself. I could go into 101 reasons why everyone should use the analysis tool, but the more important thing is to start building a habit of valuing stocks. Investing is a game where you don’t win by making all the right calls. You can be right only 40% of the time. But if your conviction and position sizing is good, you can easily beat anyone out there. When I start chasing complicated stories, structures, deals, industries that I know nothing about, I’ve lost money every time. When I focus on valuation and follow it up with patiently waiting until the stock hits my margin of safety price, I’ve been rewarded more times than I’ve been wrong. You Can Win the Fight As a freebie, I have free valuation spreadsheets you can start with. It’s combined with an easy to digest mini valuation courses over email if you are a new subscriber. Just easy guides on how to value and analyze stocks using several different methods. Charlie Munger said that if he knew where he was going to die, he’d never go there. Well, you’ve just found the 7 deadliest words in investing. They must know something that you don’t. Let’s not go there. Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Short Idea: International Bank Of Azerbaijan Bonds

Summary Russia/Oil Derivative play with downgrade/war/financial/currency de-valuation pressure currently trading in the 90s. 93% of the economy tied to oil, 2015 budget based on $90 oil, in current conflict with Armenia, S&P outlook recently moved from stable to negative. International Bank of Azerbaijan has USD & Euro debt and local currency assets, high customer and industry concentrations and a Moscow subsidiary. (IBAZAZ is accessible via FNMIX , which is a 2.44% Holder Of IBAZAZ 5.625s Of ’19) For those who say Azerbaijan is not tied to Russia… Baku, Fineko/abc.az. The Central Bank of Azerbaijan says that US currency is in feverish demand in the country because of Russia . According to CBA, demand for US dollars increased in Azerbaijan starting from mid-December under the influence of psychological factors due to sudden depreciation of Russian currency. “To maintain stability of the national currency CBA set out $1.127 bn for sale. Before December 2014 the bank purchased $1.27 bn from the market and therefore, its net balance on currency exchange transactions was $0.143 bn last year”, – CBA says. Nevertheless, in December currency reserves of CBA reduced by $1.237 bn, which exceeded its expenses for maintaining stable rate of the national currency by $110.7 million. Azerbaijan and Oil Oil and gas production and exports are central to Azerbaijan’s economy. The country’s economy is heavily dependent on its energy exports, with more than 90% of total exports accounted for by oil and gas exports , according to data from the International Monetary Fund. Progress has so far been “elusive” for Azerbaijan in its efforts to diversify the economy away from a dependence on oil and gas, and it must press a fight against corruption to improve the business climate – International Monetary Fund Azerbaijan’s budget for 2015 is based on a price of $90 a barrel At $109 barrel oil last year Azerbaijan made significant investments in projects include the development of the Azeri-Chirag-Guneshli block of fields, Baku-Tbilisi-Ceyhan oil pipeline and the first stage of development of the Shah Deniz field. (U.S. Energy Information Administration) Azerbaijan’s main producing field, the ACG field, covers 167 square miles and is located 62 miles east of Baku in the Caspian Sea. Operators expected peak production to reach 1 million bbl/d, but production at this field so far failed to reach this target. Production problems have affected ACG output in the past couple years, with unexpected production declines occurring because of technical problems. (U.S. Energy Information Administration) But What About Azerbaijan’s Other Exports? Azerbaijan’s MP, member of the parliamentary committee on economic policy, Rufat Guliyev.: “Today, more than 70 percent of Azerbaijani non-oil products are exported to Russia, Ukraine, Kazakhstan ” But The Company (SOCAR) that Produces the Oil is Owned by the Government of Azerbaijan so They Will Support them, Right ? SOCAR only produces about 20% of the country’s oil output (U.S. Energy Information Administration) The remaining 80% of Azerbaijan’s output comes from the ACG oil fields by the BP-operated Azerbaijan International Operating Company (AIOC) and at the BP-operated Shah Deniz field (which produces oil condensate) AIOC is a consortium of 10 mostly non-Azerbaijani oil companies. (U.S. Energy Information Administration) Azerbaijan – Armenian Tensions = Possible War Update: January 26th: Azerbaijan violated the ceasefire about 800 times along the Line of Contact with Karabakh troops on January 24-25. Over 14,000 shots were fired towards Armenian military positions from guns of various calibers, grenade launchers and mortars, the press service of the Nagorno-Karabakh Defense Army reported. Conflict going on since 1994 Conflict became more serious in 2014 with significant casualties Ilham Aliyev – President of Azerbaijan; August 2014 via Twitter “We will restore our territorial integrity either by peaceful or military means . We are ready for both options.” “Just as we have beaten the Armenians on the political and economic fronts, we are able to defeat them on the battlefield “. Defense outlays will grow 27 percent to 3.8 billion manat ($4.8 billion), exceeding Armenia’s total budget spending of $3.2 billion, Finance Minister Samir Sharifov said in November 2014. On top of a budget already cut significantly due to huge drop in price of oil! (2015 budget based on $90 oil) Defense Spending back at peak levels – 1994 (when conflict started) Bloomberg Data What Happens if Azerbaijan un-pegs their currency to the USD? In June of 2013 the International Monetary Fund recommended Azerbaijan un-peg the Manat to the USD “Republic of Azerbaijan, Selected Issues” IMF Country Report: 13/165 The below table shows Azerbaijan is already on its way to a possible de-pegging of the Manat. (source: “Republic of Azerbaijan, Selected Issues” IMF Country Report: 13/165) THIS JUST HAPPENED IN TURKMENISTAN The Turkemenistan Manat has been rigidly pegged to the USD since 2009 at a rate of 1USD=2,85 MANAT Devalued by 18.6% in January of 2015 Kazakhstan had their currency pegged to the dollar as well…. In February of 2014 they unpegged their currency to the USD and devalued the currency by 19% Ok ok, What Does This Have to Do with The International Bank of Azerbaijan? The International Bank is being privatized and is only 50.65% owned by the government (as of 6/30/14 previously was 60.06% on 12/31/13) Considering that 90% of the country’s exports are oil & gas related it seems a bit strange that the financials list exposure to the industry as only 1.1% of total loans It is impossible to know how much of the loan portfolio is indirectly related to the industry 62% of IBA’s loan portfolio is related to Construction/RE development and Trade/Service industries IBA has a history of extending/renewing loans instead of marking them as past due/non-performing/impaired so we don’t truly know how many loans are in this category The bank has a $2.6B 6-12 month funding gap as of 6/30/14…bigger the gap bigger the risk (up from $2.3B at 12/31/13) IBA has ~$250M of foreign syndicated loans maturing in the first 4 months of 2015 (USD & EURO denominated) IBA has credit agreements with foreign banks which have ~$1.2B and ~EUR200M drawn down on them as of 6/30/2014 These term and revolving loans have various unknown financial covenants As of 6/30/14 the value of IBAs currency forward agreements were diminimus at ($1.1M) Concentration Risk 30 companies account for 42.5% of the total corporate loan portfolio Corporate loan portfolio is ~90% of total loan portfolio 20 Entities account for 93.7% of total guarantees as of 6/30/14 (guarantees total ~$1.6B as of 6/30/14) Moscow Subsidiary= International Bank of Azerbaijan-Moscow As reported in audited IFRS statements at year-end 2013, the bank’s aggregate exposure to the 23 largest customers amounted to 42% of total gross loans or 567% of its Tier 1 capital IBAM’s exposure to construction and real estate sectors stood at 189% of Tier 1 Capital at 12/31/2016 Time for the ISIS on the Cake Azerbaijani media: Embassy increases security in Baku because of ISIS threatening Only in January several articles about ISIS’s threatening to Azerbaijan appeared in international media outlets, and Baku has already taken up special measures related to the security of the leading countries and European state diplomacy, Azerbaijani information portal “Minval.az” reports, referring to the site “Axar.az.” The portal also notes that the European outlet “Another Western Dawn News” has recently published a sensational piece of news about the ISIS threat in Azerbaijan. It reported that Abdul Wahid Khudair Ahmad, the ISIL “Minister of Internal Affairs,” had called on the warriors from Azerbaijan to commence an armed struggle against the Western-backed Azerbaijani authorities. What could happen – Attack on BTC Pipeline Azerbaijan has 3 oil & gas pipelines/routes and 80% of Azerbaijan’s oil exports are done through the BTC pipeline , arguably the largest ISIS target in the country… (click to enlarge) (click to enlarge) (source: U.S. Energy information administration) Do I think it should be trading with a single digit yield in the 90s or even 80s given the above? Absolutely Not. (click to enlarge) (Source – Google Images) Disclosure: The author is short IBAZAZ. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article. Are you Bullish or Bearish on ? 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Profiling Health Care ETFs – Why Medicine Is The Best Medicine

Summary According to the World Health Organization, global health related expenditures exceed $6 trillion annually. American population aged 65+, which is a driver of health care spending, is expected to grow by nearly 20,000,000 in the next decade according to U.S. Census Bureau. This list highlights key considerations for those who wish to have exposure to the health care industry ranging from domestic to global, large-cap to small-cap. I made the mistake of signing up for a high deductible health plan when I changed jobs this summer. I’m young and relatively healthy. My wife is young and relatively healthy. Even my daughter (who was born January of last year) is young and relatively healthy. The premiums were cheap, wellness visits and routine check-ups were covered, I got a cool $1,000 to shield me from out-of-pocket costs, and none of us visit the doctor very often. It seemed like the right thing to do. And it was. Until it wasn’t. The three of us had a few “unexpected” minor health urgencies that required, among other things, a couple of visits to rural hospitals, an urgent care stop, and some stupidly expensive but needed basic medical concoctions. When it was all said and done, I paid roughly $5,000 in premiums for the privileged of being able to pay for $5,000 in out-of-pocket costs, which was essentially the entirety of our medical bills. Let me say that everyone has since recovered, we are so blessed that our medical problems were anything but, and their are people either without insurance, or with far more serious medical issues, that spend tens if not hundreds of thousands of dollars more for care than we did. But it still hurt. $10,000 is $10,000 is $10,000. As I sat in the emergency room for the final time of 2014, staring at expensive looking equipment, refusing Tylenol (since I knew it would show up on our chart and be billed accordingly), I thought – I need to get in on this racket. Whether you are as healthy as an ox, or as sick as a dog, when you decide to invest in the healthcare sector, you have several options: Invest in individual stocks of companies that provide healthcare services (Johnson & Johnson (NYSE: JNJ ); Pfizer (NYSE: PFE ); Medtronic (NYSE: MDT ) and so on) Invest in ETFs covering the entire healthcare industry (more on that below) Invest in those that serve the healthcare industry (think hospital REITs like HCP ) Become a healthcare professional (not in the cards for this guy, even with the absurd rise of so called ” second chance” med-schools ) Since I like diversification as much as like good health, and I believe an investment in the healthcare industry should be an investment in the healthcare industry, I opted for option b), investing in healthcare ETFs. Yahoo lists no less than two dozen health-themed ETFs (complete list at end of article), but to keep it simple, I present seven ETFs for further consideration. Profiling the contenders – Unless otherwise noted, information is as of close 2/10/15 (Source: fidelity.com etf screener, all objectives are as listed on the respective funds’ websites without modification). Fidelity MSCI Health Care Index ETF (NYSEARCA: FHLC ) Market price – $33.81 1 year* beta at 1/31/15 (Fidelity) – .84 Expense ratio – .12% Total holdings – 320 Average volume – 198,495 Yield – 1.01% Price/earnings – 25.44 Price/Cash flow – 16.82 Objective – “Seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Health Care Index. Investing at least 80% of assets in securities included in the fund’s underlying index. The fund’s underlying index is the MSCI USA IMI Health Care Index, which represents the performance of the health care sector in the U.S. equity market.” Courtesy of Fidelity Top Ten Holdings by Weight (as of 2/6/15) Johnson & Johnson – 8.88% Pfizer – 6.55% Merck & Co (NYSE: MRK ) – 5.28% Gilead Sciences (NASDAQ: GILD ) – 4.59% Amgen Inc (NASDAQ: AMGN ) – 3.58% Medtronic PLC – 3.28% UnitedHealth Group (NYSE: UNH ) – 3.26% Bristol-Myers Squibb Co (NYSE: BMY ) – 3.08% Biogen Idec (NASDAQ: BIIB ) – 2.96% Celgene Corp (NASDAQ: CELG ) – 2.96% *Fund inception 10/21/13 Investment thoughts – The Fidelity fund’s volume of holdings (the highest among all funds profiled) gives it the highest mark for diversification. It also is tied for lowest expense ratio with Vanguard and when held in a Fidelity account trades commission free. Johnson and Johnson, its largest holding is trading essentially in the middle of its 52 week range (90.66 – 109.49) as of 2/11/15 while Pfizer, its second largest holding hit an intra-day 52 week high . Buy this fund if you don’t mind giving serious weight to mega-cap companies. First Trust Health Care AlphdaDEX ETF (NYSEARCA: FXH ) Market price – $61.96 3/5 year beta at 1/30/15 (Yahoo) – .76/.69 Expense ratio – .66% Total holdings – 75 Average volume – 419,984 Yield – n/a Price/earnings – 27.81 Price/Cash flow – 15.52 Objective – “The First Trust Health Care AlphaDEX® Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant® Health Care Index. The StrataQuant® Health Care Index is an “enhanced” index developed, maintained and sponsored by the NYSE Group, Inc. or its affiliates (“NYSE”) which employs the AlphaDEX® stock selection methodology to select stocks from the Russell 1000® Index. The NYSE constructs the StrataQuant® Health Care Index by ranking the stocks which are members of the Russell 1000® Index on growth factors including three, six and 12-month price appreciation, sales to price and one year sales growth, and, separately, on value factors including book value to price, cash flow to price and return on assets.” (click to enlarge) Courtesy of First Trust Top Ten Holdings by Weight (as of 2/6/15) Centene Corp (NYSE: CNC ) – 2.45% AmerisourceBergen Corp (NYSE: ABC ) – 2.38% McKesson Corp (NYSE: MCK ) – 2.38% Aetna (NYSE: AET ) – 2.36% Allergan (NYSE: AGN ) – 2.35% Patterson Companies (NASDAQ: PDCO ) – 2.33% Edwards Lifesciences Corp (NYSE: EW ) – 2.31% BioMarin Pharmaceutical (BM8) – 2.30% Incyte Corp (NASDAQ: INCY ) – 2.28% Henry Schein (HS2) – 2.27% Investment thoughts – The First Trust Health Care ETF’s “enhanced” indexing methodology allows it to represent large and small cap companies that offer attractive buy signals based on quantitative valuation metrics including price multiples and return ratios. Buy this ETF if you don’t mind paying (relatively) higher fees in order to own a fund that doesn’t track a single index but instead seeks to include opportunistic holdings based on price and performance. Also, no stock makes up more than 3% of the fund’s NAV, so don’t expect big swings in any given stock to materially impact the fund’s overall performance. Health Care Select Sector SPDR ETF (NYSEARCA: XLV ) Market price – $70.12 3/5 year beta at 1/30/15 (Yahoo) – .67/.59 Expense ratio – .15% Total holdings – 57 Average volume – 10,235,200 Yield – 1.33% Price/earnings – 24.84 Price/Cash flow – 16.88 Objective – “The Health Care Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P® Health Care Select Sector Index.” Courtesy of State Street Top Ten Holdings by Weight (as of 2/5/15) Johnson & Johnson – 10.62% Pfizer – 7.70% Merck & Co – 6.25% Gilead Sciences – 5.58% Amgen Inc – 4.32% Medtronic PLC – 3.98% UnitedHealth Group – 3.90% Bristol-Myers Squibb Co – 3.72% Biogen Idec – 3.59% Celgene Corp – 3.55% Investment thoughts – The SPDR ETF, like Vanguard, Fidelity and iShares has significant weight in a single stock (Johnson & Johnson), but only its top four holdings make up 5% or more of NAV on an individual basis. This ETF is by far the most popular health care ETF, with average volume over 10 times its next closest competitor. The SPDR fund is also near the cheapest based on its constituents price/earnings multiple. SPDR is also one of two funds profiled with over 40% exposure to pharmaceuticals. Vanguard Health Care ETF (NYSEARCA: VHT ) Market price – $129.12 3/5 year beta at 1/30/15 (Yahoo) – .68/.64 Expense ratio – .12% Total holdings – 319 Average volume – 363,562 Yield – 1.01% Price/earnings – 25.84 Price/Cash flow – 16.84 Objective – “The Health Care Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P® Health Care Select Sector Index.” Courtesy of Vanguard Top Ten Holdings by Weight (as of 12/31/14) Johnson & Johnson – 9.40% Pfizer – 6.30% Merck & Co – 5.20% Gilead Sciences – 4.50% Amgen Inc – 3.80% AbbVie (NYSE: ABBV ) – 3.30% UnitedHealth Group – 3.90% Bristol-Myers Squibb Co – 3.10% Celgene Corp – 2.80% Biogen Idec – 2.50% Investment thoughts – The Vanguard fund is tied with Fidelity for lowest expense ratio, and when purchased as Admirals shares, is the cheapest. Also like Fidelity, this fund has over 300 individual holdings giving investors broad exposure to a large number of health care related companies. PowerShares S&P SmallCap Health Care Portfolio ETF (NASDAQ: PSCH ) Market price – $62.97 3 year** beta at 1/30/15 (Yahoo) – .72/n/a Expense ratio – .29% Total holdings – 71 Average volume – 10,903 Yield – n/a Price/earnings – 32.26 Price/Cash flow – 15.61 Objective – “The PowerShares S&P SmallCap Health Care Portfolio ((Fund)) is based on the S&P SmallCap 600® Capped Health Care Index ((Index)). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to measure the overall performance of common stocks in the health care sector. Included are healthcare companies principally engaged in the business of providing healthcare-related products and services, including biotechnology, pharmaceuticals, medical technology and supplies, and facilities.” Courtesy of Invesco Top Ten Holdings by Weight (as of 2/6/15) West Pharmaceutical Services (NYSE: WST ) – 4.40% PAREXEL International (NASDAQ: PRXL ) – 4.15% Amsurg Corp (NASDAQ: AMSG ) – 3.30% Impax Laboratories (NASDAQ: IPXL ) – 3.15% MWI Veterinary Supply (NASDAQ: MWIV ) – 2.98% Medidata Solutions (NASDAQ: MDSO ) – 2.97% Haemonetics Corp (NYSE: HAE ) – 2.68% NuVasive Inc (NASDAQ: NUVA ) – 2.67% ABIOMED Inc (NASDAQ: ABMD ) – 2.59% Prestige Brands Holdings (NYSE: PBH ) – 2.51% **Fund inception 04/07/10 Investment thoughts – This small cap fund’s top ten holdings contain none of the same top ten holdings as all other funds profiled and could be a compliment to any other fund on the list. Beware that it is the most thinly traded of all funds on the list and could result in undesirable bid-ask spreads when entering or exiting a position. iShares Global Healthcare ETF (NYSEARCA: IXJ ) Market price – $103.08 3/5 year beta at 1/30/15 (Yahoo) – .75/.62 Expense ratio – .48% Total holdings – 95 Average volume – 123,427 Yield – 1.34% Price/earnings – 24.76 Price/Cash flow – 16.47 Objective – “The iShares Global Healthcare ETF seeks to track the investment results of an index composed of global equities in the healthcare sector. IXJ offers exposure to pharmaceutical, biotechnology, and medical device companies from around the world.” Courtesy of BlackRock Top Ten Holdings by Weight (as of 2/5/15) Johnson & Johnson – 6.99% Novartis AG ( NOVN ) – 6.42% Pfizer – 5.07% Roche Holding (NYSE: ROG ) – 4.63% Merck & Co – 4.11% Gilead Sciences – 3.67% Bayer AG ( OTCPK:BAYN ) – 2.94% Amgen – 2.84% Sanofi SA (NYSE: SAN ) – 2.83% Glaxosmithkline (NYSE: GSK ) – 2.73% Investment thoughts – This iShares ETF trades at the lowest price/earnings multiple and also sports the highest TTM yield of all funds profiled. While its called a global fund, be aware that many of its top holdings are also found in U.S. focused funds including Johnson & Johnson, Pfizer, Merk, and Gilead. iShares U.S. Healthcare ETF (NYSEARCA: IYH ) Market price – $148.04 3/5 year beta at 1/30/15 (Yahoo) – .68/.62 Expense ratio – .43% Total holdings – 112 Average volume – 285,592 Yield – 1.03% Price/earnings – 24.91 Price/Cash flow – 16.73 Objective – “The iShares U.S. Healthcare ETF seeks to track the investment results of an index composed of U.S. equities in the healthcare sector. IYH offers exposure to U.S. health care equipment and services, pharmaceuticals, and biotechnology companies.” Courtesy of Blackrock Top Ten Holdings by Weight (as of 2/5/15) Johnson & Johnson – 9.97% Pfizer – 7.23% Merck & Co – 5.87% Gilead Sciences – 5.24% Amgen Inc – 4.06% Medtronic – 3.72% Unitedhealth Group – 3.63% Bristol Myers Squibb – 3.47% Celgene Corp – 3.33% Biogen IDEC – 3.30% Investment thoughts – Another heavy on pharmaceuticals fund, the iShares U.S. fund sticks out as among the weaker candidates. It has limited exposure to health care technology, expenses nearly four times its cost leading competitors (Vanguard and Fidelity) and offers an unimpressive yield that is nearly half of the S&P 500. Closing thoughts: Do not buy more than one of these funds (unless one is the small cap). Reason: you will just end up with varying degrees of the same few large names. Names like Johnson & Johnson, Merck, Gilead and Amgen pepper the top 10 lists of most of these funds. Don’t expect any single stock’s outperformance to move the ETF’s price mountains. No fund has more than a 10% stake in any given company. Monitor your investments and rebalance as necessary. The composition and risk profile of these funds can and does change frequently. ETF NAME TICKER CATEGORY FUND FAMILY 1-YR RETURN 3-YR RETURN 5-YR RETURN RBS Global Big Pharma ETN DRGS Health Royal Bank of Scotland NV 25.42% 26.30% 0.00% SPDR® S&P Health Care Equipment ETF XHE Health SPDR State Street Global Advisors 14.26% 21.81% 0.00% Health Care Select Sector SPDR® ETF XLV Health SPDR State Street Global Advisors 25.14% 27.59% 19.18% iShares Nasdaq Biotechnology IBB Health iShares 33.83% 43.05% 30.36% Market Vectors® Pharmaceutical ETF PPH Health Market Vectors 23.19% 23.90% 0.00% iShares U.S. Pharmaceuticals IHE Health iShares 29.89% 27.45% 23.05% SPDR® S&P International HealthC Sect ETF IRY Health SPDR State Street Global Advisors 6.22% 17.05% 12.18% PowerShares Dynamic Pharmaceuticals ETF PJP Health PowerShares 28.13% 35.42% 30.63% First Trust Health Care AlphaDEX® ETF FXH Health First Trust 25.42% 30.71% 22.97% iShares U.S. Healthcare Providers IHF Health iShares 27.19% 26.81% 19.95% SPDR® S&P Pharmaceuticals ETF XPH Health SPDR State Street Global Advisors 29.45% 32.16% 26.09% Vanguard Health Care ETF VHT Health Vanguard 25.47% 28.67% 20.02% Guggenheim S&P 500® Eq Weight HC ETF RYH Health Guggenheim Investments 29.73% 30.12% 21.01% Fidelity® MSCI Health Care ETF FHLC Health Fidelity Investments 25.06% 0.00% 0.00% iShares U.S. Medical Devices IHI Health iShares 22.72% 25.09% 16.87% iShares U.S. Healthcare IYH Health iShares 25.14% 28.02% 19.46% iShares Global Healthcare IXJ Health iShares 17.29% 23.30% 16.33% PowerShares Dynamic Biotech & Genome ETF PBE Health PowerShares 36.34% 36.05% 24.79% PowerShares DWA Healthcare Momentum ETF PTH Health PowerShares 14.75% 24.28% 18.24% SPDR® S&P Biotech ETF XBI Health SPDR State Street Global Advisors 44.98% 41.86% 28.72% Market Vectors® Biotech ETF BBH Health Market Vectors 30.34% 47.02% 0.00% First Trust NYSE Arca Biotech ETF FBT Health First Trust 47.55% 46.21% 29.02% ARK Genomic Revolution Multi-Sector ETF ARKG Health ARK ETF Trust 0.00% 0.00% 0.00% PowerShares S&P SmallCap Health Care ETF PSCH Health PowerShares 11.13% 24.99% 0.00% ALPS Medical Breakthroughs ETF SBIO Health ALPS 0.00% 0.00% 0.00% Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.