Healthcare isn’t just good for you. It can also be good for your wallet. In times of bear markets, the top healthcare ETFs can reward investors more than many other investments. This is because these ETFs are typically capable of handling the market’s ups and downs. As investments, they experience less exposure to economic cycles because healthcare is a necessary expense, regardless of the economy.
Here are some of the characteristics and traits of the top healthcare ETFs to put into your portfolio.
Understanding the differences between the top healthcare ETFs
Any of the top healthcare ETFs can focus on a variety of segments within the healthcare industry. There may be broad diversification within an ETF, investing in a range of companies from pharmaceuticals and medical technology to hospitals and nursing homes. Or, an ETF may focus more on just one individual niche like health maintenance organizations. In any case, the industry is considered non-cyclical because medical expenses are often necessities, making this a strong sector to invest in, especially for defensive-minded investors.
The healthcare industry is invaluable for the types of work done within it. There are always innovations and improvements within healthcare that can help people live longer, healthier lives. Although many of the successful healthcare companies and top healthcare ETFs may not be household names like big tech companies or blue chip stocks, the services and products they provide have a significant impact on the lives of many.
Furthermore, as age demographics change and large portions of the population age, there is greater value and need for healthcare services. Older populations tend to spend more on healthcare, and as people live longer lives, those expenses could last for more considerable periods.
Beyond the individual healthcare needs, governments worldwide may be considering greater investments into an array of healthcare services and infrastructure, especially in consideration of global pandemics.
Recognizing the characteristics of the top healthcare ETFs
Many healthcare companies are adding technology to their healthcare services. The “medtech” industry is part of the growth within healthcare, and it provides solutions and innovations that can improve the efficiency, delivery, and usage of healthcare services and devices. Artificial intelligence (AI), robotics, and 3D printing are all involved in the evolution of medtech.
There are dozens of healthcare ETFs in the ETF marketplace, but they are not all created equal. Some of these are traditional ETFs that practice passive management and have lowered management expenses, while others are inverse ETFs or leveraged ETFs. For conservative-minded investors or those interested in lower prices, the traditional ETF options will be more in line with your investment strategy.
It is essential to recognize the diversification of an ETF you’re interested in buying. The broader the diversification, the less volatile it will be. Once you have found the healthcare ETFs that fits your investment style, it is best to invest in a lump sum so you can save on brokerage fees.
Do you invest in healthcare in any form? What are some of the top healthcare ETFs you have an interest in?