The 5 Best Healthcare ETFs of 2023
Many health sector ETFs have struggled in 2023 as investor fears over government-mandated drug price caps have kept a lid on related stocks. In Q1, inverse ETFs betting against health stocks outperformed, but despite headwinds, big pharma funds recovered in Q2. See the best healthcare ETFs by performance, as well as details on the top-performing funds.
What Is a Healthcare ETF?
A Healthcare ETF is an exchange-traded fund that is specifically focused on tracking the performance of companies within the healthcare sector. The healthcare sector encompasses a wide range of industries and companies involved in various aspects of healthcare, including medical treatment, pharmaceuticals, biotechnology, medical devices, healthcare services and more.
5 Best Healthcare ETFs of 2023 by Performance
The best healthcare ETFs of 2023, as measured by performance, have benefited by outsized gains within the medical devices industry. Returns for the broad-based healthcare index funds have been dragged down by the lackluster performance of pharma stocks and biotechnology, which tend to receive large allocations in these funds.
Here are the best healthcare ETFs based on year-to-date performance through September 15, 2023.
Ticker | Fund Name | YTD Return | AUM | Expense Ratio |
MEDI | 12.72% | $4.47M | 0.80% | |
RXD | 8.73% | $1.14M | 0.95% | |
BIS | 8.72% | $4.67M | 0.95% | |
PPH | 6.85% | $444.44M | 0.36% | |
LABD | 5.21% | $78.04 | 1.09% |
Note: Leveraged and inverse ETFs are primarily used for advanced short-term trading and hedging strategies and are not generally suitable for beginning investors or long-term investment strategies.
Harbor Healthcare ETF
The $HARBOR HEALTH CARE ETF(MEDI)$ is an actively managed fund that invests primarily in large-cap U.S. companies in a range of differentiated healthcare products, technologies and services that meet the management team's valuation criteria.
YTD return: 12.72%
Assets under management: $4.47 million
Expense ratio: 0.80%
As of date: September 15, 2023
ProShares UltraShort Health Care
The $ProShares UltraShort Health Care(RXD)$ fund daily inverse exposure to the S&P Health Care Select Sector Index, which is broad sampling of health care providers and services, biotechnology, medical devices and pharmaceuticals.
YTD return: 8.73%
Assets under management: $1.14 million
Expense ratio: 0.95%
As of date: September 15, 2023
ProShares UltraShort NASDAQ Biotechnology
The $ProShares UltraShort Nasdaq Biotechnology(BIS)$ fund is an inverse ETF that provides -2x exposure to a market-cap weighted index of pharmaceutical and biotechnology companies listed on the Nasdaq exchange.
YTD return: 8.72%
Assets under management: $4.67 million
Expense ratio: 0.95%
As of date: September 15, 2023
VanEck Pharmaceutical ETF
The $VanEck Pharmaceutical ETF(PPH)$ seeks to track a market-cap-weighted index consisting of the 25 largest U.S. pharmaceutical companies.
YTD return: 6.85%
Assets under management: $444.44 million
Expense ratio: 0.36%
As of date: September 15, 2023
Direxion Daily S&P Bear 3X Shares
The $S&P Biotech Bear 3X Shares(LABD)$ fund is an inverse (-3x) ETF betting against an equal-weighted index of U.S biotechnology stocks, as well as medical research and pharmaceuticals companies.
YTD return: 5.21%
Assets under management: $78.04 million
Expense ratio: 1.09%
As of date: September 15, 2023
Outlook for Best Healthcare ETFs
The outlook for the healthcare sector appears to be turning neutral to positive for 2023 and 2024 as the Medicare pricing threat may be less of a headwind to big pharma as it initially appeared. Additionally, the best healthcare ETFs could benefit if fears of a recession in 2024 increase, as the health sector is viewed as a defensive investment because consumers tend to keep spending on health products and services during economic downturns.
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