Invest in the Health Care Sector With ETFs

List of Health Care ETFs

Investing in ETFs
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Without a doubt, the health care industry is one of the biggest sectors in our economy, and investing in this sector is rich in debate on its regulation, high costs, control of the industry, and more. So as an investor, if you have an opinion, you can try to capitalize on that opinion and take advantage of a health care industry ETF. Below, we'll explain what health care ETFs are, share a list of standard ETFs, and highlight some advanced ETFs.

What Are Health Care ETFs?

First, let's review what an ETF is. An ETF, or exchange-traded fund, is a type of investment security that groups financial assets together. This basket of securities can include stocks, bonds, commodities, currencies, and more. They are similar to mutual funds, but unlike mutual funds, ETFs trade like stocks. An investor can buy and sell ETFs shares during trading hours on an exchange. The diversification and convenience of exchange-traded funds have made them popular with investors.

Health care ETFs are funds comprised of securities from a variety of companies within the health care industry.

The range of companies in health care ETFs includes those in pharmaceuticals, consumer health, medical devices, biotechnology, health insurance, and more.

There are quite a few reasons you may want to consider an investment in a health care ETF. You can:

  • Take advantage of a bullish or bearish opinion based on your research.
  • Make a play on the price swings in the sector due to the current political climate.
  • Utilize an ETF as part of a top-down investment strategy for the health care sector.
  • Include different sector ETFs for an overall diversified strategy for your portfolio.
  • Hedge any risk you have related to the health care industry from other investments.

List of Health Care ETFs

If you are looking to gain exposure to the health care sector, while also reaping the benefits of an ETF, the list below will be a great starting point.

Although we share a comprehensive list, it isn't expected, nor recommended, that investors buy a share of every security in the list.

Investors should run their own due diligence to find out if an ETF is fit for them. At a high level, you want to be sure that the fund investment strategy is in line with what you are looking for. Following that, you should check a few key things that all investors should check on any funds they invest in, even outside of the health care sector. General points include a fund that has low fees, high volume, stable management, and solid performance vs. its benchmark.

  • BFIT - Global X Health & Wellness Thematic ETF
  • BTEC - Principal Healthcare Innovators Index ETF
  • CURE - Direxion Daily Healthcare Bull 3X Shares ETF
  • FHLC - Fidelity MSCI Health Care Index ETF
  • FXH - First Trust Health Care Alpha DEX ETF
  • IHF - iShares U.S. Healthcare Providers ETF
  • IXJ - iShares S&P Global Healthcare Sector ETF
  • IYH - iShares U.S. Healthcare ETF
  • JHMH - John Hancock Multifactor Healthcare ETF
  • PTH - Invesco DWA Healthcare Momentum ETF
  • RXD - Ultra Short Health Care ProShares ETF
  • RXL - Ultra Health Care ProShares ETF
  • RYH - Rydex S&P Equal Weight Health Care ETF
  • SPXV - S&P 500 Ex-Health Care ETF
  • VHT - Vanguard Health Care ETF
  • XHE - SPDR S&P Health Care Equipment ETF
  • XHS - SPDR S&P Health Care Services ETF

As you can see, we have a variety of ETFs coming from different providers and focusing on different strategies. You see ETFs from certain providers such as SPDR, Vanguard, Fidelity, and ProShares. There are funds that focus on health care equipment, health care services, and health care innovation. Additionally, there are a few advanced health care ETFs.

Advanced Health Care ETFs

Several of the ETFs within the list above are considered to be "advanced." They are advanced due to the complexity, structure, and risk involved.

Higher risk can mean higher rewards, but the rewards are no guarantee.

Let's explain a few of the categories of advanced ETFs.

Leveraged ETFs

Leveraged ETFs use leverage with hopes of amplifying gains. A few from our list of health care ETFs include:

  • CURE - Direxion Daily Healthcare Bull 3X Shares ETF
  • RXD - Ultra Short Health Care ProShares ETF
  • RXL - Ultra Health Care ProShares ETF

As an example, CURE is a fund that is bullish and levered 3X. That means that fund expects its securities to increase in price. Leverage helps increase gains but also increases loss potential. At 3X leverage, if a normal fund went up $1, this fund would go up $3, and vice versa if it went down.

Inverse ETFs

There was also an inverse ETF on the list:

  • RXD - Ultra Short Health Care ProShares ETF

Inverse ETFs aim to deliver the opposite performance of the index it tracks. This ETF is short the market, or bearish. The fund expects its basket of securities to decrease in price. If the underlying securities move down in price, this fund makes money. If they move up in price, the fund loses money.

Please keep in mind, as with any investment, ETFs and ETNs are not without risk, especially if you implement advanced strategies such as leveraged or inverse funds. However, if you conduct thorough research and complete your due diligence, you should be able to find the best fund for your particular needs. You shouldn't hesitate to call your broker or consult a financial professional if you have any questions or concerns.

Where to Find ETFs

Here are several links to the websites for each ETF provider behind these products You can drill down and analyze performance, holdings, and any other data you need to make an informed decision.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.