Healthcare is an important issue in the upcoming U.S. presidential election as heart disease, cancer, respiratory infections and HIV/AIDS - the leading causes of death in the world - combine with the aging world population to accelerate demand for healthcare services. A closer look at the iShares S&P Global Healthcare Fund (AMEX:IXJ) gives investors a roadmap to building a portfolio of global healthcare providers. (Read how ETFs can help you as an investor at Five Ways To Find A Winning ETF.)

Just How Global Is IXJ?
The IXJ fund allocates 36% of its assets to foreign healthcare-related stocks including Swiss drug maker Novartis AG (NYSE:NVS) and French drug maker Sanofi-Aventis (NYSE:SNY). Similar healthcare funds with no exposure to foreign-based healthcare providers include the SPDR S&P Pharmaceuticals Fund (AMEX:XPH) and the Pharmaceutical HOLDRs Fund (AMEX:PPH). As of October 29, the IXJ fund fell the least among those mentioned since the beginning of the year. IXJ fell 22.78% while the XPH and PPH funds lost 24.37% and 24.60% over the same time frame.

Why Invest Globally?
A global approach to investing in healthcare factors in the growing health needs of domestic baby boomers along with healthcare demands of the larger world around us. Globally, the World Health Organization predicts higher levels of cancer and heart disease as populations in middle- and low-income countries age over the next 25 years. (Learn how to diversify your portfolio by reading Going International.)

Domestic Reasoning
Domestic demand will be strong as well. The American Hospital Association estimates that by 2030, many baby boomers will be managing more than one health issue such as diabetes, arthritis and obesity.

Fund Leadership
Top IXJ fund holdings, including Johnson & Johnson (NYSE:JNJ), Novartis and Pfizer (NYSE:PFE), are likely to be leaders in treating domestic and international patients.

Johnson & Johnson's dominant position in consumer products like Band-Aid brand bandages, Tylenol medications and Johnson's baby products suggests consumers will continue to turn to its products for their basic healthcare needs. In the third quarter, sales of J&J's consumer products division rose 13.1% to $4.1 billion despite the tough economic environment in the U.S. and abroad.

Pfizer remained the world leader in revenue from its cholesterol drug Lipitor with $13.7 billion in sales last year, although challenges from generic competitors are looming in the future.

Novartis, last year alone, had three drugs with more than $1 billion each in revenues. These included $5 billion in sales of the hypertension drug Diovan, $3.1 billion from its leukemia drug Gleevec and $1.3 billion from its cancer drug Zometa.

Final Thoughts
Investing in international markets over the past year has been challenging. Funds like the iShares MSCI EAFE Index (AMEX:EFA) have fallen 44.59% since the beginning of the year. J&J attributed 50% of its revenue in Q3 from international sales, suggesting that investing in foreign-based healthcare providers is as important as investing in healthcare providers with a global reach.

Related Articles
  1. Mutual Funds & ETFs

    ETFs Can Be Safe Investments, If Used Correctly

    Learn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
  2. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  3. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  4. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  5. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  6. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  7. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  8. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  9. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  10. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center