Healthcare sector undervalued, with iShares U.S. Pharmaceuticals ETF leading gains but risks from concentration exist.

The healthcare sector, particularly healthcare equipment, is currently undervalued compared to historical averages. The iShares U.S. Pharmaceuticals ETF (IHE) has notably outperformed the broader healthcare ETF XLV by 27% over the past year, driven largely by heavy holdings in Eli Lilly and Johnson & Johnson. However, this concentration poses risks, prompting some investors to consider the more diversified equal-weighted fund XPH. The article also highlights 10 stocks that are cheaper than their peers as of May and offers exclusive portfolio insights through the Quantitative Risk & Value group led by Fred Piard.