The best healthcare ETFs to trade will depend on what opportunity you are looking for in the financial market. With so many options available, it is important to understand exactly how a healthcare ETF works.
ETFs or Exchange Traded Funds are pools of assets that are grouped up based on their similarity. ETFs are associated by sector, region, or economic activity, and they track the underlying asset of an index. They are similar to mutual funds but are traded on the market like stocks during trading hours.
What is a healthcare ETF?
Healthcare ETFs invest in companies that are involved in the medical industry. These companies can be dedicated to different areas of it like pharmaceutical, biotechnology, equipment, machines, medical insurance, and others.
Ever since the COVID-19 pandemic in 2020, the healthcare sector has been closely watched by investors and traders. While concerns persist and the world works towards a new normal, the performance of healthcare ETFs is being carefully followed.
If you would like to have healthcare ETFs in your portfolio, we invite you to take a look at our top 10 best healthcare ETFs to buy in 2021.
Invest in healthcare ETFs in 3 steps
Open a trading account
Opening an account is not difficult. Simply click on the signup button and fill in your basic personal information like name and email and choose a password. A verification link or code will be sent to your e-mail so you can confirm your identity and activate your account.
Choose healthcare ETFs
Once you have activated your new account, it is time to deposit. Check if your broker has a minimum deposit and what are the payment methods it offers. It can be credit card, debit card, epayments, or bank wire transfer. It is possible that your deposit must be verified.
Place your trade
When you deposited funds to your account, you can use your balance to place your first trade. Find the ETFs on your broker’s website and look for your favorite healthcare ETFs. It would be good if you already know how many of these you can or are willing to buy. It is possible that your broker will offer you ideas, too.
Where can I trade healthcare ETFs?
You can only trade through an intermediary, known as a broker, who helps you access the assets held by the financial security. There are numerous brokers, and each of them is compliant with a specific regulatory body. It is important to look at their fees, commissions, and other details such as trading platforms and allowed techniques.
We have shortlisted our top three brokers in 2021 based on their regulations, deposit and withdrawal methods, fees, education opportunities, and more.
Best healthcare ETFs to buy now
The financial market offers many opportunities but also options. This is why we created our top list of the best healthcare ETFs to trade.
- XLV - Health Care Select Sector SPDR Fund
- POTX - Global X Cannabis ETF
- CNBS - Amplify Seymour Cannabis ETF
- VHT - Vanguard Healthcare ETF
- ARKG - ARK Genomic Revolution ETF
- IBB - iShares Nasdaq Biotechnology ETF
- XBI - SPDR S&P Biotech ETF
- IHI - iShares U.S. Medical Devices ETF
- PTH - Invesco DWA Healthcare Momentum ETF
- KURE - KraneShares MSCI All China Health Care Index ETF
XLV - Health Care Select Sector SPDR Fund
XLV tracks health care stocks from the S&P 100 index since 1998. During 2020, its annual return was 13.33%. It has 62 US-only holdings with its number one sector being pharmaceuticals followed by healthcare equipment. It has $24.80 billion in markets under management and a $158.78 billion weighted average market cap.
POTX - Global X Cannabis ETF
With POTX, you can gain exposure to cannabis industries in developed countries such as Canada, the United States, the United Kingdom, and Australia. This ETF was born in 2019 and has 17 holdings. It has $133.89 million in assets under management and an average market cap of $2.00 billion.
CNBS - Amplify Seymour Cannabis ETF
CNBS began its way in 2019 and now has 22 related to cannabis and hemp holdings in its portfolio. In 2020, it had an annual total return of 31.60%. It includes Canada (53.71%), the USA, and the UK. It has an average daily trading volume of $2.90 million.
VHT - Vanguard Healthcare ETF
Since 2004, VHT has followed US health care stocks dedicated to equipment, pharmaceuticals, biotechnology, among others. It has a total of 442 holdings, and its assets under management are valued at $13.98 billion. In 2020, it had an annual total return of 18.21%.
ARKG - ARK Genomic Revolution ETF
With its inception in 2014, ARKG has a total of 49 holdings that are part of the genomics industry. During 2020, it had its best annual total return ever, valued at 180.51%. Its assets are worth around $11.98 billion.
IBB - iShares Nasdaq Biotechnology ETF
IBB’s annual total return in 2020 was 25.90%. This ETF follows biotechnology and pharmaceutical companies on NASDAQ. Starting from its inception in 2014 until today, it has 280 holdings and a market cap of $35.78 billion.
XBI - SPDR S&P Biotech ETF
In 2020, XBI had 48.19% as the annual daily total return. Since 2006, it tracks US-only biotechnology stocks. It has 169 holdings and its assets are worth $8.41 billion. Its market cap is $9.47 billion.
IHI - iShares U.S. Medical Devices ETF
IHI was founded in 2006, and it is an ETF dedicated to companies that manufacture and distribute US medical devices. It grew by 24.17% in 2020 and now has 63 holdings. Its market cap is estimated at $101.91 billion.
PTH - Invesco DWA Healthcare Momentum ETF
Established in 2006, PTH has 47 holdings dedicated to healthcare equipment, biotechnology, and more. The US is its only country, it has an average market cap of $39.75 billion and $836.16 million in assets under management.
KURE - KraneShares MSCI All China Health Care Index ETF
Initiated in 2018, KURE has 87 holdings in China (56.60%), Hong Kong, and the United Kingdom. Its leading sector is pharmaceuticals (52.82%), and it had an annual total return of 67.28% in 2020.
Expert tip on investing in healthcare ETFs
Now that you know about the best healthcare ETFs to trade in 2021, it is important to decide which ones will be good for you to make profit. If you want to be successful in the healthcare ETF industry, it is necessary to understand how the market works and keep your emotions under control when deciding about your actions. Being able to make calm decisions when the market is going in a direction you did not expect will help you make money trading. Sometimes emotions can overpower us and might send us down the wrong path. As mentioned before, it might be a good idea to look for a broker with good customer support such as live chat, phone, email, and a physical address. They might also be able to help you with any doubts and offer a good educational section with webinars or video classes.
Why trade ETFs?
If you haven’t entered the financial world yet or simply want to have a diversified portfolio, ETFs might be a good plan. Innovation seems to be one of the key factors in healthcare after the pandemic hit the world. Traders and investors are keeping their eyes on healthcare ETFs. It could be important to invest in ETFs that follow companies which emphasize research and development.
ETFs offer trading flexibility since you can buy or sell during market hours and effortless exposure to the sector, region, or industry you chose. However, ETFs react to breaking news, so it is important to stay informed to make good decisions.
Frequently Asked Questions
The number one healthcare ETF will depend on what you are looking for. Maybe a specific sector or a group like pharmaceutical, biotechnology, equipment, machines, medical insurance, or others.
This will depend on the time and money you can dedicate to trading or investing.
Anyone interested in owning part of the underlying assets to maximize their profit trading or investing.
Shares is a unit of stock while ETFs can hold many stocks. They can also have commodities or bonds.
Beginners can do well in the ETF market as long as they have studied enough to feel confident when placing a trade. Knowledge and controlling your emotions are key.
It will depend on the ETF, but you can look at their market cap, daily average trading volume, number of assets, and other factors.