Swine Flu, Drugstores and ETFs

The Wall Street Journal recently ran a story on how drugstores might benefit from the upcoming swine flu season.

We take the question one step further and ask which ETFs might benefit if the H1N1 virus returns this fall.

The Dow Jones newswire story, Drug Stores Poised To Benefit From Potential H1N1 Resurgence, quotes several analysts and money managers as predicting that drugstores such as CVS, Walgreen and Rite Aid may see a lift in traffic, revenue and profits if the Swine Flu becomes more widespread.  Industry watchers expect more consumers to buy hand sanitizer, get prescriptions filled and even receive their flu shots at the drug stores.

Several Exchange Traded Funds have a concentrated position (3% or more) in CVS and Walgreen.  Financially challenged Rite Aid doesn’t make the top 10 list among any fund.  ETFs with CVS and Walgreen among top 10 holdings include:

First Trust Consumer Staples Alphadex Fund (FXG) tracks an “enhanced” index based on technical and fundamental measures including price appreciation, sales to price ratio, sales growth, book value to price, cash flow to price and return on assets.

Consumer Staples Select Sector SPDR Fund (XLP) tracks the consumer staples sector of the S&P 500including companies in the food & staples retailing, household products, food products, beverages, tobacco and personal products industries.

The iShares Dow Jones US Consumer Services Sector Index Fund (IYC) tracks the Dow Jones Consumer Services Index.  In addition to drug store chains, top holdlings include Wal-Mart andMcDonald’s.

Vanguard Consumer Staples ETF (VDC) tracks the MSCI Consumer Staples Index and carries a very low 0.25% expense ratio.