Healthcare stocks and exchange traded funds are facing several headwinds for the rest of 2012. Factors such as lower profitability, European austerity measures, the 2012 U.S. Presidential election and the U.S. Supreme Court’s recent decision to uphold the healthcare reform law will all affect the sector.

“We believe the Court’s ruling removed some of short-term uncertainty that has weighed on the Health Care sector since it agreed to hear the case in late 2011,” S&P Capital IQ said in a research note. [Healthcare ETFs Best Sector Performers in 2011]

“However, the Court’s ruling does not make the law any less contentious, and we expect continued ongoing battles, and potentially more uncertainty after this year’s elections. Congressional Republicans, presumed Presidential candidate Mitt Romney, and others opposed to the law have stated plans to continue fighting it,” Jeffrey Loo, S&P Capital analyst wrote in a note. [Healthcare ETFs Breaking Out After Supreme Court Ruling]

Despite the impact of the upcoming presidential election, S&P Capital IQ rated three major healthcare ETFs as “Overweight”. The Healthcare Select Sector SPDR (NYSEArca: XLV)iShares Dow Jones US  Healthcare Index (NYSEArca: IYHand the Vanguard Healthcare ETF (NYSEArca:VHT)  are all heavily tilted toward the pharmaceutical industry.

The patent cliff that is in full swing currently has not kept investors from carrying the aforementioned funds. XLV is up 5.3%, and IYH and VHT are up about 6% each this year. [Obamacare Impact on Healthcare ETFs]