The healthcare sector includes a broad range of products and services related to medical treatment, and has historically outperformed the market. Here we'll look at the best healthcare ETFs for 2026.
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In a hurry? Here's the list:
- XLV – Health Care Select Sector SPDR Fund
- VHT – Vanguard Health Care ETF
- FHLC – Fidelity MSCI Health Care Index ETF
- IXJ – iShares Global Healthcare ETF
- RYH – Invesco S&P 500 Equal Weight Health Care ETF
Contents
Introduction – Why Healthcare Stocks?
The healthcare sector broadly covers pharmaceutical manufacturers, hospitals, health insurers medical devices, surgery centers, and more. The sector has historically outperformed the broader market with lower volatility, and tends to be more resilient during market downturns, even though the performance of health care stocks is dependent upon a complex range of economic and demographic factors. Trends affecting the health care sector include an aging population, prevalence of chronic disease, technology and innovation, insurance coverage, personalized medicine, and more. Major players include Johnson & Johnson, Pfizer, AbbVie, Medtronic, Amgen, etc.
The financial success – and subsequent stock behavior – of many of these companies hinges heavily on clinical trial outcomes, patents, and FDA approvals. Like consumer staples, the health care sector is considered non-cyclical, and thus can be a smart defensive equities play. Below are the best health care ETFs to get exposure to these stocks.
The 5 Best Healthcare ETFs
Below are the 5 best healthcare ETFs:
XLV – Health Care Select Sector SPDR Fund
The Health Care Select Sector SPDR Fund (XLV) is by far the most popular ETF for this sector, with over $24 billion in assets. The fund seeks to track the Health Care Select Sector Index, providing broad exposure to U.S. health care. This ETF has 63 holdings and an expense ratio of 0.13%.
VHT – Vanguard Health Care ETF
The Vanguard Health Care ETF (VHT) is next in popularity, with over $13 billion in assets. The fund seeks to track the MSCI US Investable Market Health Care 25/50 Index. With over 430 holdings, this ETF provides broader diversification and comparatively more mid- and small-cap exposure than XLV above. The fund is still market cap weighted though, so a relatively small handful of companies makes up the majority of the total fund. This ETF has an expense ratio of 0.10%.
FHLC – Fidelity MSCI Health Care Index ETF
The Fidelity MSCI Consumer Staples Index ETF (FHLC) is the cheapest fund on the list, with an expense ratio of 0.08%. The ETF seeks to track the MSCI USA IMI Health Care Index and has 392 holdings. It has identical exposure as and should be comparable to VHT above.
IXJ – iShares Global Healthcare ETF
The above 3 ETFs only target U.S. health care stocks. Those desiring global diversification can do so with the iShares Global Healthcare ETF (IXJ). The fund seeks to track the S&P Global 1200 Healthcare Sector Index, which excludes small-cap stocks and emerging markets. The ETF's top 5 geographies are the United States (68%), Switzerland (10%), Japan (6%), the United Kingdom (5%), and Denmark (3%). This ETF has 110 holdings and an expense ratio of 0.46%.
RYH – Invesco S&P 500 Equal Weight Health Care ETF
Unlike the funds above, the Invesco S&P 500 Equal Weight Health Care ETF (RYH), as the name suggests, is equally-weighted, meaning each stock in the fund gets roughly equal representation. Equal weighting may be an attractive, desirable feature in this context, as it reduces single company risk in a sector of highly volatile stocks. It also spreads risk more evenly among different sub-industries like pharmaceuticals, biotech, medical devices, facilities, and more. Because of its equal weighting, RYH also heavily tilts mid-cap. This ETF seeks to track the S&P Equal Weight Health Care Index and has an expense ratio of 0.40%.
Where to Buy These Health Care ETFs
All of these ETFs should be available at any major broker. M1 Finance is my choice for U.S. investors. The broker has zero trade commissions, zero account fees, fractional shares, dynamic rebalancing, and a modern, sleek, user-friendly interface and mobile app.
Canadians can find the above ETFs on Questrade or Interactive Brokers. Investors outside North America can use Interactive Brokers.
Disclosures: None.
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Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a research report. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. Hypothetical examples used, such as historical backtests, do not reflect any specific investments, are for illustrative purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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