This is a healthcare sector ETF that tracks the Dow Jones U.S. Health Care Index one-to-one. It holds U.S.-listed healthcare companies across the sector in proportion to their market capitalization, so it follows the performance of the sector as a whole.

It suits long-term investors who want concentrated exposure to the U.S. healthcare sector, as well as investors who want to raise the weight of defensive sectors in their portfolios.

It is a passively managed (index-tracking) ETF launched in 2000 by BlackRock (iShares).

The fund holds the constituents of the Dow Jones U.S. Health Care Index in proportion to their market capitalization. It covers the healthcare industry broadly, including pharmaceuticals, biotech, medical devices, health insurance, and healthcare services, and rebalancing is applied quarterly following decisions by the index committee.

• Tracks the Dow Jones U.S. Health Care Index, covering every healthcare subsector
• The well-known iShares brand from BlackRock and strong trading liquidity

Assets under management (AUM) stand at $4.5B, and the expense ratio is 0.37% per year.

Its fee is somewhat higher than similar healthcare ETFs such as XLV and VHT, but it is distinguished by covering all healthcare industries on the basis of the Dow Jones index.

The U.S. healthcare sector has tended to show relative stability during market downturns thanks to its defensive, economy-resistant character, though short-term volatility can arise from U.S. Food and Drug Administration approval trends and earnings releases from large pharmaceutical companies.

The healthcare sector rests on a structural base of demand driven by population aging and the rise of chronic disease, so long-term fund inflows tend to continue. However, discussions of U.S. drug price regulation or changes in health insurance policy can create short-term outflow pressure.

Its defensive character, covering the healthcare sector as a whole, is a strength, but investors should watch its fee level and top-holding concentration.

XLV, shown in the table, is the leading competing ETF, tracking only S&P 500 healthcare stocks at a relatively low fee. VHT is a low-cost healthcare ETF run by Vanguard, and FHLC is a lowest-cost-tier alternative run by Fidelity. XBI and IHI are subsector ETFs focused on biotech and medical devices respectively, so their exposure differs. If you want additional biotech focus, you can also consider IBB; if you need a focus on healthcare services, IHF; and IHE is also worth a look for its specialization in healthcare providers and services.

Here are the points to check before investing in IYH. Although it is a defensive sector ETF, it is advisable to carefully review its fee level relative to peers, top-holding concentration, and policy and regulatory risk before making an investment decision.

Given the nature of the healthcare sector, U.S. Food and Drug Administration review results, drug price regulation discussions, and earnings changes at major insurers can create short-term volatility. The somewhat higher fee relative to peers is also a cumulative burden when holding for the long term.

For investors who want to hold the U.S. healthcare sector as a whole in a passive way, it is a core option. If cutting fees is the priority, FHLC and VHT are alternatives, and for concentration in a specific subsector, IHI, IBB, and IHF are alternatives.