The healthcare sector and related ETFs have been among the best performing defensive plays this year as strong earnings and potential Trump administration actions on drug pricing drew greater investment interest.
“Health-care closed the first half of the year as the best performing defensive sector,” Christopher Dhanraj, head of ETF investment strategy for BlackRock Inc.’s iShares funds, told Bloomberg. “Still, investors may consider this an interesting entry point. The sector is trading near its lowest level relative to the S&P 500 in four years.”
For example, the iShares U.S. Healthcare Providers ETF (NYSEArca: IHF) is among this year’s best performing healthcare-related ETFs, rising 23.6% year-to-date. Nevertheless, IHF generated an average annualized return of 13.2% over the past three years, underperforming the S&P 500’s average return of 15.6% over the same period.
Among the largest healthcare sector-related ETFs, the Health Care Select Sector SPDR (NYSEArca: XLV) advanced 11.3%, iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB) increased 9.9% and Vanguard Health Care ETF (NYSEArca: VHT) increased 13.4% year-to-date. XLV and VHT both provide broad exposure to the healthcare sector while IBB focuses on the biotechnology segment within the healthcare space.
Among the best performing healthcare-related ETFs of 2018, the PowerShares S&P SmallCap Energy Portfolio (NasdaqGM: PSCH) jumped 41.2%, ARK Genomic Revolution Multi-Sector ETF (NYSEArca: ARKG) surged 29.4% and SPDR S&P Health Care Equipment ETF (NYSEArca: XHE) increased 28.9% year-to-date.