Market Overview

It's Still All About Politics For This ETF

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It's Still All About Politics For This ETF

The health care sector and the related exchange traded funds have been mired in political controversy this year and that is particularly true of health care services providers.

What Happened

As has been widely noted, Dow component UnitedHealth (NYSE: UNH) and the iShares U.S. Healthcare Providers ETF (NYSE: IHF) are among the assets that have been stymied by "Medicare for All" talk.

IHF, which tracks the Dow Jones U.S. Select Healthcare Providers Index, is up 5.2% year to date, a dismal performance compared to the 17% returned by the S&P 500. Shares of UnitedHealth, which command nearly 22% of IHF's weight, are lower by almost 2% this year, good for one of the worst performances in the Dow Jones Industrial Average.

Why It's Important

One day doesn't make or break trends, but on Monday, IHF's Monday gain of 0.13% wasn't awe inspiring when measure against the broader market. Again, politics were at play.

Sen. Kamala Harris (D-CA) appears to be backing off Medicare for All, criticizing Bernie Sanders's legislation on the matter that she previously co-sponsored.

“As you may have noticed, over the course of the many months, I have not been comfortable with Bernie’s plan, the Medicare for All plan. And I’ll tell you why,” said Harris. “It comes back to listening.”

Sanders, the Vermont senator who's in the midst of his second quest for the Democratic nomination, fired back at his California colleague via social media:

What's Next

As for what's next, that's easy to answer. The more Medicare for All is discussed, the worst for stocks like UnitedHealth and ETFs such as IHF.

That's not a political statement. It's fact and Monday proves as much. Yesterday, just two of the 30 Dow stocks closed lower. One was UnitedHealth.

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Sen. Bernie Sanders of Vermont speaks at a presidential candidate forum at the NAACP National Convention on July 24, 2019 in Detroit. Photo by Dustin Blitchok.

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