It is just one anecdote, but it paints a picture of exactly how strong the healthcare sector has been during the current bull market in U.S. stocks. That is, last year was the first year since 2008 that the Health Care SPDR (ETF) (NYSEARCA:XLV), the largest healthcare exchange-traded fund (ETF) by assets, finished lower on an annual basis.
Underscoring the healthcare sector’s resiliency, XLV is up 15% year-to-date, good for one of the best performances among the sector SPDR ETFs. The healthcare sector’s rally has been intense enough this year that the sector has, at times, topped financial services for the second spot in the S&P 500 Index behind technology.
Given the current trajectories of the healthcare sector and its financial rival, it is possible that healthcare will again gain the second spot in the S&P 500 and hold it for awhile. Two of the 15 members of the Dow Jones Industrial Average that are up at least 10% year-to-date are healthcare stocks — Johnson & Johnson (NYSE:JNJ) and UnitedHealth Group Inc (NYSE:UNH).
Diversified healthcare ETFs, such as XLV, typically offer exposure to the major healthcare sub-industries. That means large weights to pharmaceuticals and biotechnology and, at the individual holdings level, big exposure to the likes of JNJ, Amgen, Inc. (NASDAQ:AMGN) and related fare.
Some of the best healthcare ETFs are more focused and tactical. Just look at these funds, which are among the best ETFs you can find in today’s market.