A defensive ASX ETF for a recessionary environment: experts

In an ageing world newly aware of the potential threats posed by pandemics, healthcare shares have received plenty of attention lately.

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There are a wide range of exchange-traded funds (ETFs) available to Aussie investors.

Today we look at an ASX ETF that tracks a specific industry, namely healthcare. And we look at why two financial pros list it as a 'buy'.

A defensive ASX ETF

In an ageing world with the global pandemic still very much in circulation, healthcare shares have received plenty of attention these past two years.

Aussie investors looking for exposure to international healthcare stocks with a single investment may wish to look into the BetaShares Global Healthcare ETF (ASX: DRUG).

This ASX ETF is invested in a wide range of international healthcare companies. Some 45% of them are involved in pharmaceuticals, with 19% focused on healthcare equipment, and 11% in the biotechnology space.

DRUG's top four holdings are UnitedHealth Group Inc (NYSE: UNH), Johnson & Johnson (NYSE: JNJ), AbbVie Inc (NYSE:ABBV) and Pfizer Inc (NYSE: PFE).

Year-to-date, this ASX ETF is down 2.4%. That compares to a 3.9% loss posted by the All Ordinaries Index (ASX: XAO) so far in 2022.

Why these two fundies list DRUG as a buy

Speaking with Livewire, Felicity Thomas from Shaw and Partners said DRUG was an ASX ETF to buy.

According to Thomas:

If you think we're going into a recessionary environment, you want to tilt your portfolio to be a little bit more defensive. Healthcare is defensive and we've got an ageing population globally, so I think it's a really good long-term play

Now we're not looking at an imminent recession here in Australia just yet. But a growing cohort of economists is beginning to predict that the United States could be heading down that road sooner than later. And where the world's biggest economy goes, most others tend to follow.

Steering clear of potential recessions, Ben Nash from Pivot Wealth also listed this ASX ETF as a buy, citing the immense expenditures going into healthcare globally.

Nash said:

I think that we're seeing huge amounts of money being spent on healthcare in Australia and globally. The US is one of the biggest global markets and healthcare costs are pretty staggering over there. I think that plus the secondary exposure to the property market makes this one a solid performer for the medium to long term.

Investors looking for an ASX ETF to add to their portfolios for the longer term may want to run their slide rule across DRUG.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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