Fidelity MSCI Health Care Index ETF (FHLC) Covered Calls

The Fidelity MSCI Health Care Index ETF (FHLC) is a passively managed exchange-traded fund that tracks the performance of the MSCI USA IMI Health Care 25/50 Index. The fund provides broad exposure to the U.S. healthcare sector, including pharmaceuticals, biotechnology, healthcare equipment, and managed care companies. With a highly competitive expense ratio, FHLC offers a cost-efficient way to invest in the full market-cap spectrum of American healthcare.

You can sell covered calls on Fidelity MSCI Health Care Index ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for FHLC (prices last updated Fri 4:16 PM ET):

Want to make money with covered calls?  Sign Up For A Free Trial

The Fidelity MSCI Health Care Index ETF (FHLC) is a cost-effective investment vehicle designed to provide comprehensive exposure to the diversified United States healthcare sector. The fund tracks the MSCI USA IMI Health Care 25/50 Index, a market-cap-weighted benchmark that includes large, mid, and small-cap companies. This "all-cap" approach allows FHLC to capture the stability of established global healthcare giants alongside the high-growth potential of emerging biotechnology and medical technology firms.

The fund employs a representative sampling indexing strategy, meaning it invests in a representative sample of securities that collectively match the investment profile of the underlying index. To maintain regulatory diversification, the 25/50 capping methodology ensures that no single issuer exceeds 25% of the fund’s assets and that the sum of all issuers with a weight greater than 5% does not exceed 50% of the total. This structure provides a balanced yet deep look into the innovations driving modern medicine.

Core Business and Products

The core "product" of FHLC is a diversified equity portfolio of approximately 400 holdings. The fund is heavily weighted toward pharmaceuticals and healthcare equipment, but also includes significant allocations to biotechnology and healthcare providers. Major holdings typically include industry leaders such as Eli Lilly & Co, UnitedHealth Group, and Johnson & Johnson. Other key constituents include specialized firms like AbbVie and Thermo Fisher Scientific.

Competitive Landscape

The healthcare ETF space is one of the largest sector categories in the market, featuring intense competition between broad sector funds and specialized thematic products. FHLC competes primarily on its industry-leading low expense ratio and its broader reach into small-cap innovators. Key competitors in the healthcare sector include:

1. Health Care Select Sector SPDR Fund: The largest and most liquid healthcare ETF, tracking the S&P 500 healthcare components and focusing on large-cap blue-chip leaders.
2. Vanguard Health Care ETF: A primary rival that tracks a similar broad MSCI index and competes directly with FHLC on cost and diversification.
3. iShares Biotechnology ETF: A thematic competitor that focuses specifically on the high-growth, high-volatility biotechnology sub-sector.
4. iShares U.S. Medical Devices ETF: Targets the medical equipment and devices industry, providing a more focused alternative to FHLC’s broad exposure.
5. iShares Global Healthcare ETF: Offers exposure to healthcare companies worldwide, including international pharmaceutical leaders alongside domestic firms.

Strategic Outlook and Innovation

The strategic outlook for FHLC is supported by long-term secular trends, including an aging global population and the continuous need for medical advancement. The fund is positioned to benefit from breakthroughs in genomics, immunology, and personalized medicine. As healthcare providers and insurers shift toward value-based care and digital health solutions, the underlying index evolves to include the companies leading these structural transitions, ensuring the fund remains a modern representation of the industry.

Innovation within the sector is currently driven by the integration of artificial intelligence in drug discovery and the expansion of robotic-assisted surgery. Companies in the FHLC portfolio are leveraging AI to drastically reduce the time and cost required to bring new therapies to market. Furthermore, the rise of "GLP-1" weight-loss drugs and new oncology treatments represents a significant growth tailwind for several of the fund’s largest constituents. FHLC’s broad-based approach ensures that investors are exposed to these multi-decade innovation cycles across the entire healthcare value chain.

Want more examples? FHI Covered Calls | FHN Covered Calls