Should You Buy iShares S&P Global Health Care ETF at This Share Price?

What happened to the IXJ share price?

iShares S&P Global Health Care ETF [ASX:IXJ] was up by 0.46% in early afternoon trading. The ETF was trading at $143.15 a share. The Aussie market was able to hold its ground during much of today, giving some relief to the past six days of losses.

The stock markets in the US and in Australia held up well, given continued sell-off in bonds overnight. We are in a correction, and investors should be getting ready to get back in after it is done.

Stable growth is its strength

The iShares S&P Global Health Care ETF is one of the best ETFs on the Australian market. It has been gaining strength over the last five years. It continues to grow along a fairly stable path.

This is a desirable trait for those seeking stable growth. You may argue that the index does not give an outstanding return. However, its ability to deliver stability is its strength. Remember, higher return always equals higher risk. You can think of IXJ as low risk.

Consisting of the biggest healthcare companies in the world, IXJ mainly holds companies from the developed world. The US is the largest healthcare consumer in the world today.

Why has IXJ been able to produce such steady growth? The main reason is due to the fact that our society that is getting older. And I am not just talking about Australia, or the developed world. I am talking ‘global aging’. We are living longer and we are spending more on health care — there are no two ways about it.

What should you do with IXJ shares now?

There is not much you can do to enhance an already steadily-growing asset. IXJ has delivered 139% since 2009. That is not a bad result, considering that most investors lost money in commodities and the mining sector during the same period.

Of course, what you need to watch out for is a severe downturn. The IXJ was created after the GFC, which means you don’t have real data to stress-test it. My advice is to be watchful of assets that have not been stress-tested by the GFC. Be prepared for the worst!

IXJ is a very good asset to own in any portfolio. Its fundamentals are sound and it has been a consistent asset that produces more results than promises (unlike many of the assets on the market).

Ken Wangdong+
Emerging Market Analyst, New Frontier Investor