One Of The Best Performing ETFs Of The Last Decade Is In A Buy Zone Right Now

Over the last 10 years, this ETF was one of the top performing, ranking third with a gain of more than 330%. That's more than double what the S&P 500 returned over that period. The best-performing ETFs list didn't include leveraged ETFs. After declining in 2022, the price is recovering and the chart is setting up for another potentially bullish long-term move.

So what ETF is it?

It's the iShares U.S. Medical Devices ETF IHI. Over the last decade, it outperformed all other non-leveraged ETFs except for Semiconductor and Information Technology ETFs (those rank first and second, respectively).

The ETF tracks U.S. equities that manufacture or distribute medical devices. 

Regardless of its stellar historical track record, here are a few reasons it may be a good purchase now. 

• In terms of performance, healthcare is ranked third over the last three months, out of all the sectors. While most other sectors are in negative territory, healthcare has been moving up.
• Over the last decade, the ETF has rarely dropped more than 20%. In 2022 the price declined 31%, and has been recovering since. After a decline of 20% or more, gains have been 120% to 178% (before another 20% or greater decline).
• Over the last year, the ETF has been forming a rounded bottom. Based on this pattern, $54 to $52 appears to be a good long-term entry point.

Chart source: TradingView The 2022 low occurred at $46.21. With a conservative upside estimate of 100%—which is smaller than all other rallies following a 20% or greater decline in the last decade—the price target is $92.42. That's over 70% above the May 23 closing price of $54.04. To manage risk, consider placing a stop loss near $50, which is below the March 10 swing low. Or place a stop loss near $46, which is below the October 13 low of 2022. With nearly $40 or more of potential upside, the long-term trade provides a good reward-to-risk ratio. 

Disclaimer: The author doesn't currently hold a position, but may initiate one over the next several weeks or months if conditions in the indices continue to improve.