Investing in biotechnology and health-related exchange traded funds (ETFs) would seem to make sense as the baby boomer generation ages. An increase in older citizens creates more demand for health care services with the best technology and medications available. In fact, the number of available health care-related ETFs has doubled to 41 in 2007, according to Trang Ho for Investor’s Business Daily.

However if you decide to add this sector to your portfolio, be careful which biotech and health-related ETFs you choose, as all are not created equal. For example, the iShares Nasdaq Biotechnology (IBB) that follows the Nasdaq Biotechnology Index has had a much more volatile performance than the general market. IBB is a general biotech ETF that invests at least 90% of its assets in biotech-related American Depository Receipts (ADRs). Currently, IBB is up 5.4% year-to-date.

If you look at the iShares Dow Jones U.S. Medical Devices (IHI) it’s been soaring up, up and away compared to the market, as Gary Gordon for ETF Expert notices. IHI follows the Dow Jones U.S. Select Medical Equipment index. It invests in medical equipment companies that make prosthetics, pacemakers, X-ray machines among other devices. Currently, IHI is up 15.6% year-to-date.

Tags: Biotechnology, Sector ETFs