When biotechnology stocks soared last year and through the first two plus months of 2014, some astute market observers pointed out that it was not a bad thing that some health care exchange traded funds were establishing roles as market leaders.

While traditional health care ETFs such as the Health Care Select Sector SPDR (NYSEARca: XLV) are heavy on blue chip pharmaceuticals stocks investors have previously used as shelter from volatile market environments, names like Johnson & Johnson (NYSE: JNJ) and Pfizer (NYSE: PFE), XLV also allocates about 18% of its weight to biotech. That biotech allocation was close to 20% earlier this year. [Health Care ETFs Face Stretched Valuations]

But this is not your grandfather’s health care sector, nor is it, as the Wall Street Journal notes, your dad’s health care sector. The changing face of health care, the third-largest sector weight in the S&P 500, “reflects the increasing importance that biotechnology is playing in medical treatment. The rise of biotech, once seen as highly speculative, comes as analysts and investors expect an aging population and the Affordable Care Act to increase health-care consumption,” reports Steven Russolillo for the Journal.

That increased biotech exposure was a drag on ETFs such as XLV and the iShares U.S. Healthcare ETF (NYSEArca: IYH) last month, though the losses incurred by those ETFs were tolerable. While the iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB) plunged 10.4% last month, XLV and IYH lost an average of just 0.75%. [Strong Sector ETFs]

One month of modest losses does not change the fact that XLV is the second-best of the nine SPDRs this year. Nor do those losses change the fact that over the past 12, 24 and 36 months, health care is the top-performing S&P 500 sector, according to S&P Dow Jones Indices. The S&P 500 health care sector’s three-year return of 76.8% is more than 1,000 basis points better than the second-place sector, consumer discretionary.

Over the past 12 and 24 months, health care is also the best sector in the S&P MidCap 400 Index as well as being the top sector over the past year and three years in the S&P SmallCap 600, according to S&P Dow Jones Indices.

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