BlackRock has rolled out a UCITS version of its popular US medical devices ETF in Europe, on Euronext Amsterdam.
The ETF provides exposure to US medical device manufacturers such as Abbott Laboratories, Thermo Fisher Scientific, Medtronic, Danaher, and Intuitive Surgical.
The iShares US Medical Devices UCITS ETF (UMDV NA) comes with a total expense ratio of just 0.25% and is linked to the Dow Jones U.S. Select Medical Equipment Capped 35/20 Index.
The index measures the performance of US-listed companies that manufacture and distribute medical devices such as MRI scanners, prosthetics, pacemakers, x-ray machines, and other non-disposable medical devices.
The index includes large-, mid- and small-cap stocks, subject to a free-float-adjusted market capitalization of at least $500 million at the time of rebalancing (or at least $250m for existing constituents).
Constituent weightings are determined by free-float-adjusted market capitalisation, conditional on various caps to satisfy diversification requirements. The weight of the largest constituent in the index is capped at 35% and the weights of all others are capped at 20% with buffers of 2% and 1% applied on these limits at each quarterly rebalancing.
The index currently has 59 holdings and is sufficiently diversified to avoid triggering any of the index caps.
The top-ten holdings are currently Abbott Laboratories (13.82%), Thermo Fisher Scientific (12.60%), Medtronic (9.96%), Danaher (9.93%), Intuitive Surgical (6.18%), Becton Dickinson (5.89%), Stryker (4.68%), Boston Scientific (4.16%), Edwards Lifesciences (3.68%), and Baxter International (3.14%).
Recent performance has been strong. The index is up 9.68% year to date and 19.80% over one year. This compares to 3.66% and 16.22%, respectively, for the S&P 500.
BlackRock will no doubt be hoping that the fund enjoys a similar level of success as its NYSE Arca-listed counterpart, the iShares U.S. Medical Devices ETF (IHI US), which has grown to just shy of $8 billion in assets. Almost $3bn of this has been added this year courtesy of strong returns and healthy inflows.
ETFs tapping into the health theme have been beneficiaries of portfolio allocation shifts precipitated by the Covid-19 coronavirus pandemic.
Within Europe, the fund is the first to provide pure-play exposure to the US medical devices segment.
Up to now, ETF investors allocating to this theme have had to deploy either a broad US healthcare ETF or one of the global innovative healthcare ETFs, which have strong US tilts.
These include the iShares S&P 500 Health Care Sector UCITS ETF (IUHC LN) and Xtrackers MSCI USA Health Care UCITS ETF (XUHC LN), and the iShares Healthcare Innovation UCITS ETF (HEAL LN), L&G Healthcare Breakthrough UCITS ETF (DOCT LN), and HAN-GINS Indxx Healthcare Innovation ETF (WELL LN).