Is the iShares Global Healthcare ETF the best long-term investment in 2020?

Is the iShares Global Healthcare ETF (ASX: IXJ) the best long-term ASX shares investment in 2020?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When thinking of ASX shares that might prove a good investment in 2020, one's mind immediately jumps to the healthcare sector.

Healthcare is an evergreen, recession-proof industry at the best of times, but I think 2020 has highlighted the importance that healthcare companies can play in the global economy.

The ASX has many top healthcare companies in its own right. You have the beloved CSL Limited (ASX: CSL) – now the ASX's largest company. There's also Ramsay Health Care Limited (ASX: RHC) and Cochlear Limited (ASX: COH).

These companies do have global exposure. But I think investors looking for even more diversification should look at the iShares Global Healthcare ETF (ASX: IXJ).

A healthy ETF for your portfolio?

The iShares Global Healthcare ETF (exchange-traded fund) tracks a basket of over 100 healthcare shares from around the world. You are getting the truly massive global healthcare companies like Johnson & Johnson (maker of Band-Aids and Listerine), Pfizer (Lyrica, Robitussin and the little blue pill) and Novartis (Ritalin). For some perspective here, Johnson & Johnson alone is over 4 times as large as CSL by market capitalisation.

This ETF is heavily weighted toward US shares with a 68% weighting, but you also get a fair chunk of exposure to Switzerland, Japan and the United Kingdom.

The durability and 'recession-proof' nature of this industry can be seen in these performance numbers. IXJ has returned 17.23% in the last year alone, and an average of 9.13% per annum over the last 5 years. That compares very well against the S&P/ASX 200 Index (ASX: XJO), which has returned -14.42% and 1.39% over the same periods respectively (including dividend reinvestment).

A management fee of 0.47% per annum isn't the cheapest on the ETF market, but it's still not too expensive in my view (remember, 0.47% translates to $4.70 for every $1,000 invested every year). For this unique exposure to the global healthcare sector, I think it's well worth it for this investment.

Thus, I think the IXJ ETF could be used as a strong 'core' holding in any ASX portfolio, whether it be growth or income-focused. You shouldn't expect massive returns every year (like the last year has seen for this ETF), but I think it's a strong and stable investment that you don't have to worry about becoming obsolete with technological change or shifting consumer tastes like some other ASX shares.

Sebastian Bowen owns shares of Johnson & Johnson, Pfizer and Ramsay Health Care Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. The Motley Fool Australia has recommended Cochlear Ltd. and Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Healthcare Shares

Is this beaten-down ASX healthcare share a bargain buy now?

One expert has given their view on this stock.

Read more »

drug capsule opening up to reveal dollar signs signifying rising asx share price
Healthcare Shares

3 ASX healthcare shares going gangbusters on Thursday

Investors are sending these ASX healthcare stocks soaring today. But why?

Read more »

Two lab workers fist pump each other.
Healthcare Shares

Is it time to cash in on Sigma shares?

Shares have extended after the Chemist Warehouse merger.

Read more »

Person holding Australian dollar notes, symbolising dividends.
Healthcare Shares

Buy this ASX 200 share that is swimming in cash

Bell Potter sees potentially big returns on offer from this cashed-up stock.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Healthcare Shares

Are CSL shares a buy after the biotech's FY25 forecasts?

Brokers continue to weigh in.

Read more »

Female pharmacist smiles with a digital tablet.
Healthcare Shares

Are Wesfarmers or Sigma shares a better buy in the pharmacy arena?

These two stocks are both leaders in the industry.

Read more »

A young man goes over his finances and investment portfolio at home.
Healthcare Shares

Down 20%, is the NIB share price undervalued?

Here's what Goldman Sachs is saying about this blue chip stock.

Read more »

four excited doctors with their hands in the air
Healthcare Shares

Sigma Healthcare shares rocket 39% on Chemist Warehouse merger approval

The ACCC doesn't believe the company's merger with Chemist Warehouse will lessen competition.

Read more »