Vanguard Health Care ETF (AMEX:VHT)

TheDumbMoney (56.56) Submitted: 2/25/2011 10:34:50 AM : Start Price: $56.99 VHT Score: +15.09

As part of my monthly stock investment, I am investing the first third of my investment in VHT, which is another low-cost Vanguard ETF, this one focusing exclusively on the health care industry. It has not escaped my attention that three of the four largest holdings of the ETF are stocks I already own: JNJ, PFE, and ABT. I continue to think the first and third of those in particular are undervalued. But by investing in VHT I can greatly diversify my health care exposure, while still maintaining my bet on the investment future of the health care industry in this country, which is based on its current relative low valuation, and the not-original idea that baby boomers are going to consume a lot of health care. VHT is probably the best way to bet on that, unless one is a genius stock-picker, which I have increasingly begun to suspect I am not. As a bonus, it has strongly underperformed the SPY over the past year, as sexier sectors have led the stock rally. While that underperformance may continue in the short term, if we have a downturn its relative low valuation should provide some insulation, and in the longterm I must keep faith that long-term returns will be greater if a purchase is made at a lower p/e, other things being equal. The 5-star CAPS rating doesn't hurt, either, as apparently not a single all-star currently downthumbs it, even though all who have upthumbed it are eating red.... I'll post my other two picks for this month later, when I purchase them, likely on Monday. As always, all my picks are my real money portfolio, and are my only real life picks. They constitute a small portion of my total assets, the rest of which are in a 401ks, in my house, or in cash emergency savings. Happy picking!