Best Healthcare ETFs for 2026
Healthcare ETFs provide broad exposure to one of the largest and most defensive sectors in the economy. From pharmaceutical giants and medical device makers to health insurers and hospital operators, the healthcare sector offers a mix of growth potential and recession resilience that makes it a core portfolio holding for many investors. Healthcare spending consistently grows faster than GDP in most developed nations, creating a structural tailwind for companies in this space.
XLV, the Health Care Select Sector SPDR Fund, is the most popular healthcare ETF and holds the healthcare components of the S&P 500. It is dominated by mega-cap names like UnitedHealth, Johnson & Johnson, and Eli Lilly. VHT from Vanguard offers a broader approach with over 400 healthcare holdings at a very low expense ratio, capturing mid-cap and small-cap healthcare firms that XLV misses. IYH from iShares tracks the Russell 1000 Health Care Index and provides another large-cap-focused option with a slightly different index methodology.
Healthcare is often considered a defensive sector because people need medical care regardless of economic conditions. However, the sector faces risks from drug pricing legislation, patent expirations, and shifting reimbursement policies. Understanding these dynamics helps investors choose the right blend of pharmaceutical, biotech, medtech, and managed care exposure within their healthcare ETF allocation.
How We Rank
ETFs are ranked by assets under management (AUM). Only ETFs with $50M+ in assets are included. Data is updated daily.
| # | Symbol | Fund Name | AUM |
|---|---|---|---|
| 1 | SCHD | Schwab U.S. Dividend Equity ETF | $108.74B |
| 2 | IWM | iShares Russell 2000 ETF | $82.83B |
| 3 | XLV | State Street Health Care Select Sector SPDR ETF | $43.85B |
| 4 | VHT | Vanguard Health Care ETF | $20.40B |
| 5 | VTWO | Vanguard Russell 2000 ETF | $18.60B |
| 6 | IWO | iShares Russell 2000 Growth ETF | $15.03B |
| 7 | HDV | iShares Core High Dividend ETF | $15.02B |
| 8 | XBI | State Street SPDR S&P Biotech ETF | $10.60B |
| 9 | RWL | Invesco S&P 500 Revenue ETF | $10.07B |
| 10 | IBB | iShares Biotechnology ETF | $9.99B |
| 11 | ICVT | iShares Convertible Bond ETF | $7.76B |
| 12 | FESM | Fidelity Enhanced Small Cap ETF | $6.03B |
| 13 | ARKK | ARK Innovation ETF | $5.56B |
| 14 | NEAR | iShares Short Duration Bond Active ETF | $4.88B |
| 15 | IXJ | iShares Global Healthcare ETF | $4.21B |
| 16 | FV | First Trust Dorsey Wright Focus 5 ETF | $3.80B |
| 17 | IYH | iShares U.S. Healthcare ETF | $3.69B |
| 18 | IHI | iShares U.S. Medical Devices ETF | $3.46B |
| 19 | FLXR | TCW Flexible Income ETF | $3.37B |
| 20 | FHLC | Fidelity MSCI Health Care Index ETF | $3.29B |
| 21 | FBT | First Trust NYSE Arca Biotechnology Index Fund | $2.81B |
| 22 | EWL | iShares MSCI Switzerland ETF | $2.37B |
| 23 | VTWG | Vanguard Russell 2000 Growth ETF | $1.80B |
| 24 | IHE | iShares U.S. Pharmaceuticals ETF | $1.63B |
| 25 | ARKG | ARK Genomic Revolution ETF | $1.56B |
What to Look For
Examine the sub-sector breakdown — pharmaceutical, biotech, managed care, and medical devices each have very different growth profiles and risk characteristics. Expense ratios in broad healthcare ETFs are typically very low, ranging from 0.10% to 0.40%. Consider whether you want S&P 500-only exposure or a broader universe that includes mid and small caps.
Look at the top holdings concentration, as many healthcare ETFs are heavily weighted toward a handful of mega-caps. Also check the fund's exposure to high-growth areas like obesity drugs, gene therapy, and AI-powered diagnostics, which are driving much of the sector's recent momentum.
Which Healthcare ETFs Is Best for You?
XLV is the go-to healthcare ETF with massive liquidity, a deep options market, and a straightforward S&P 500 healthcare exposure. Its concentration in mega-caps means it is heavily influenced by companies like UnitedHealth Group and Eli Lilly. XLV is ideal for investors who want large-cap healthcare exposure as a sector rotation tool or defensive allocation.
VHT is the best choice for broad, diversified healthcare exposure. With over 400 holdings spanning large, mid, and small caps, VHT captures the full spectrum of the US healthcare industry. Its expense ratio of around 0.10% makes it one of the cheapest sector ETFs available. For long-term buy-and-hold investors, VHT offers the most comprehensive coverage.
IYH provides a middle ground between XLV and VHT in terms of diversification. It tracks the Russell 1000 Health Care Index, which is broader than the S&P 500 but still focused on large caps. IYH can serve as a solid alternative for investors who want a slightly different index methodology without going as broad as VHT.
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