Exchange-traded funds (ETFs) offer investors broad-based exposure to the entire healthcare sector.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
There are lots of components to healthcare. From pharmaceutical companies to insurers, medical device makers to companies that develop and distribute medical supplies to hospitals. These various components can perform differently from one another.
Just as a pharmaceutical company such as Eli Lilly (LLY) can see its stock soar, health insurers such as Humana (HUM) can see their share price plunge. In such an environment, it can be difficult for investors to know where to invest. Picking winners from losers can seem impossible.
Own the Entire Market
Investing experts recommend that people own the entire market rather than individual stocks. This is where ETFs come in. In the healthcare space, there are several ETFs that allow investors to own the entire market. These include the Vanguard Health Care ETF (VHT) that provides broad, low-cost exposure to the entire U.S. healthcare sector.
There’s also the iShares U.S. Healthcare ETF (IYH) that tracks a broad index of U.S. healthcare stocks, and the iShares Global Healthcare ETF (IXJ), which offers international healthcare exposure, including major pharmaceutical companies. Below is a comparison of these three ETFs.
Comparing Healthcare ETFs
The chart below shows that all three of the healthcare ETFs listed in this article offer strong one-year returns, and each has a Smart Score of six. The ETFs also provide a dividend payment to shareholders.
