ETF of the Day - IHF

Shares of U.S. health insurers rallied Tuesday, after the Center for Medicare and Medicaid Services announced plans to increase the amount the government pays to insurance firms for its Medicare Advantage plan.

The payments to insurers will increase by 3.3% in 2014 versus the original proposal of cutting the payments by 2.2%. This sent the stock soaring the last 2 days.

Big winners include Humana ($HUM), UnitedHealth Group ($UNH), and Cigna ($CI).

An ETF that concentrates on the health insurers is the iShares Dow Jones US Health Care Providers Index ETF ($IHF). The ETF is up 2.6% today and 6% in the last week.

IHF Notes:

• Total of 47 stocks
• Largest Holdings are $UNH, Express Scripts Holding ($ESRX), and Wellpoint ($WLP) and they make up 32% of the ETF.
• Expense ratio = 0.46%
• Dividend Yield = 0.86%
• Beta vs S&P 500 = 1.1
• P/E Ratio = 18.61
• 12 month return = 18% 

The chart below is $IHF over the last year. Clearly you do not want to chase after a 6% rally in one week, but a pullback to the $78 area could be the time to get in.