This previous article described a profitable trading strategy with the stocks of the Technology Select Sector SPDR ETF (XLK), and this article described a strategy with the consumer staples stocks (XLP) of the S&P 500. Similarly, the healthcare stocks of the S&P 500 can be profitably traded to provide good returns.
Emulating the Healthcare Select Sector SPDR ETF
The analysis was performed on the on-line portfolio simulation platform Portfolio 123.
Since historic holdings of the Healthcare Select Sector SPDR ETF (XLV) are not published, a custom universe was constructed from the S&P 500 healthcare stocks of FactSet’s Revere Business Industry Classifications System.
The rule to set up the custom universe “S&P 500 (HEALTH)” in Portfolio 123 is: RBICS(HEALTHCARE).
The current holdings (61 stocks) of S&P 500 (HEALTH) are almost identical to the current holdings of XLV (63 stocks).
Backtesting of S&P 500 (HEALTH) universe
A backtest from 1/2/2009 to 9/23/2020