Fidelity MSCI Health Care Index ETF (FHLC) seeks to track the MSCI USA IMI Health Care Index, which measures the performance of U.S. healthcare companies across all market capitalizations including pharmaceuticals, biotechnology, medical devices, and healthcare services. This sector-focused equity ETF provides comprehensive exposure to America's healthcare industry.
How It Works
FHLC uses a passively managed, market-capitalization-weighted approach that mirrors its benchmark index by holding healthcare stocks in proportion to their market value. The fund rebalances quarterly to maintain alignment with index changes and sector weight adjustments. As a sector-specific ETF, it concentrates investments exclusively in healthcare companies, typically holding 200-300 positions ranging from large pharmaceutical giants to smaller biotech firms.
Key Features
- Zero expense ratio makes it one of the most cost-effective healthcare sector ETFs available to investors
- Comprehensive healthcare exposure including pharmaceuticals, biotechnology, medical devices, and healthcare services across all market caps
- Managed by Fidelity with over decade of operational history since 2013 inception providing sector expertise
Risks
- This ETF can lose significant value during healthcare sector downturns, potentially declining 20-30% when drug approvals fail or regulatory changes occur
- Concentrated sector exposure means no diversification benefits—all holdings move together during healthcare-specific crises like pricing controversies or patent cliffs
- Healthcare stocks face unique regulatory risks from FDA decisions, Medicare changes, and political healthcare reform that can cause sudden volatility
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for investors with medium-to-high risk tolerance seeking targeted healthcare sector exposure over 3+ year time horizons. Appropriate for those wanting to overweight healthcare relative to broad market indices or capitalize on demographic trends like aging populations.