The healthcare sector, the third-largest sector weight in the S&P 500, is getting some of its groove back in 2017 and that is boosting an array of exchange traded funds. Within that bullish trend, some of the healthcare ETFs that were solid last year amid a disappointing run for the sector are still shining bright.
That includes medical device ETFs, such as the iShares U.S. Medical Devices ETF (NYSEArca: IHI), the largest dedicated medical devices exchange traded fund. IHI has an equal-weight rival, the SPDR S&P Health Care Equipment ETF (NYSEArca: XHE). XHE is up 10% year-to-date while IHI is higher by almost 12%.
IHI has also seen plenty of mergers and acquisitions activity among its components in recent years, but that trend within the health care sector has come under scrutiny as the U.S. Treasury Department looks to crack down on U.S. firms acquiring rivals with foreign domiciles so that they can avoid paying U.S. taxes. More recently, inversions have occurred after large U.S. companies merged with smaller foreign firms. The U.S. company would reincorporate in a tax-friendlier country, like Ireland, while maintaining much of their core operations in the U.S.