3 Healthcare ETFs for FDA-Approved Profits

Healthcare stocks are unique among the market’s sectors in that they provide a little of everything: growth, defense, and income. 

And by investing in the best healthcare ETFs, we can add diversification to that list.

As far as sectors go, healthcare is fairly wide-ranging, playing host to cash-rich pharmaceuticals, fast-moving biotechnology companies, innovative medical equipment makers, entrenched insurers, and more. But given that these stocks’ fates rest on events such as FDA approvals and Medicare reimbursement rates, it can be extremely difficult to pick winners in the space. Healthcare exchange-traded funds let us skip the guesswork and instead own entire swaths of the sector with just one purchase.

Today, I’m going to introduce you to some of the best healthcare ETFs you can buy. This is a mix of ways to approach the sector, including products that own healthcare stocks broadly, as well as those that concentrate on the sector’s most popular subsets.

Disclaimer: This article does not constitute individualized investment advice. These securities appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

The Best Healthcare ETFs

Picking winners in the stock market is generally an uphill battle, but that especially seems to be the case in the healthcare sector. 

For instance, while we might generally guess that a company trying to address weight loss through medicine could find success, it’s much more difficult to predict whether its trial treatment will ever make it to market. Or while constantly rising healthcare premiums might make every insurer seem like a sure thing, numerous other factors can still keep their stocks grounded.

Healthcare ETFs allow us to make more general bets on the space, whether that’s on the pharma industry’s ability to keep paying generous dividends, or the biotech industry’s ability to keep delivering stock-boosting breakthroughs.

With all of that in mind, let’s look at a few of the picks from my wider look at the best healthcare ETFs to buy. In no particular order …

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State Street Health Care Select Sector SPDR ETF

• Inception: Dec. 16, 1998
• Assets under management: $42.8 billion
• Dividend yield: 1.5%
• Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested

The State Street Health Care Select Sector SPDR ETF (XLV) is the standard-bearer of healthcare-sector funds. It’s the oldest healthcare ETF, closing in on three decades of service. It’s the biggest, at nearly twice the size of its closest peer. And thanks to a 2025 fee reduction, it’s also the cheapest healthcare ETF you can buy.

Like all of the Select Sector funds, XLV is extremely straightforward. It’s an index fund that tracks the healthcare sector within the S&P 500, which currently amounts to 61 U.S. healthcare stocks. It’s market cap-weighted, which means the larger the company, the greater the percentage of XLV’s assets is invested in that company’s stock. For instance, right now, $1.1 trillion Eli Lilly (LLY) accounts for a whopping 15% of assets, while $12 billion dialysis specialist DaVita (DVA) accounts for just 0.1%.

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By investing in the Health Care Select Sector SPDR ETF, you’re getting exposure to all of the different subsets of the healthcare sector. Pharmaceuticals are tops at nearly 40% of assets, and thus have far more sway over XLV’s performance than any other industry. However, biotechnology, healthcare providers and services, healthcare equipment and supplies, and life sciences tools and services all have double-digit weights, so they’re not being completely drowned out.

XLV is tilted toward mega-cap dividend stocks such as Merck (MRK) and Pfizer (PFE), and even Dividend Aristocrats and Dividend Kings such as Johnson & Johnson (JNJ) and AbbVie (ABBV). The result is a 1.5% yield that, while not exactly enough to bowl over high-income hunters, is about half of a percentage point better than what we’re earning from the S&P 500.

The State Street Health Care Select Sector SPDR ETF is about as much of a blunt instrument as you’ll find in the sector. But its bargain-basement fees and blue-chip composition make it one of the best healthcare ETFs we can buy.

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VanEck Pharmaceutical ETF

• Inception: June 23, 2005
• Assets under management: $1.0 billion
• Dividend yield: 1.9%
• Expense ratio: 0.36%, or $3.60 per year on every $1,000 invested

Traditionally, much of the healthcare sector’s income production comes from the pharmaceutical space: companies that build treatments based on synthetic compounds.

This trait is on full display in the VanEck Pharmaceutical ETF (PPH), which tracks the MVIS US Listed Pharmaceutical 25 Index—an index that includes pharmaceutical R&D firms, as well as companies that produce, market, and sell pharmaceuticals.

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Most of the names in here are brands you’ve likely seen through either TV ads or at your drug store: Lilly, Merck, Pfizer, Bristol-Myers Squibb (BMY), and AstraZeneca (AZN). They’re the corporations that developed and produced the drugs … or in some cases, bought the companies that did. But you also get a little exposure to companies like McKesson (MCK), whose role in the pharmaceutical chain is simply distribution.

And unlike the aforementioned broad-sector funds, PPH offers quite a bit of international diversification. American companies make up about 65% of assets, while the rest is split up among firms domiciled in the U.K., Switzerland, Denmark, and a few other developed nations.

A focus on pharmaceuticals, as well as exposure to Europe (whose blue chips tend to pay more than their American counterparts), results in a dividend yield that’s almost twice what the S&P 500 pays.

I’ll note that there’s more than one great pharmaceutical ETF out there—the Invesco Pharmaceuticals ETF (PJP) is on my 2026 list of the best ETFs to buy as a great way to leverage any bounceback in pharma. However, PPH is a better option for squeezing income out of the pharmaceutical industry, it has lower fees, and its long-term performance is comparable.

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Simplify Health Care ETF

• Inception: Oct. 7, 2021
• Assets under management: $361.0 million
• Dividend yield: 0.6%
• Expense ratio: 0.51%, or $5.10 per year on every $1,000 invested

Actively managed ETFs have flourished over the past few years, but they’re still relatively new (and as a result, small) compared to index products. 

To wit: The Simplify Health Care ETF (PINK), which is approaching its fifth birthday, has $360 million in assets—that’s just barely enough to make the top 20 healthcare ETFs by assets, but that also makes PINK the second largest actively managed healthcare ETF.

Michael Taylor, David Berns, and Jeff Schwarte have a broad strategy of producing “multi-cap exposure to groundbreaking and innovative companies” within the healthcare and related sectors. While they own just 55 companies, they provide access to all the major healthcare industries: pharma, biotech, and the like. 

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Where they differ from a simple index is that they’re not bound by many rules guiding selection and weighting. PINK’s positions are effectively “dealer’s choice.” So top holdings include large allocations to juggernauts like Eli Lilly and insurer Humana (HUM), as well as smaller biotech companies like Arcutis Biotherapeutics (ARQT). It also has a few outliers—a mid-single-digit weighting in eyewear retailer Warby Parker (WRBY), and a top-five position in PureCycle Technologies (PCT), an industrial-sector firm whose recycled polypropylene (plastic) can be used in a variety of medical-industry applications.

PINK has beaten both its Morningstar category average and benchmark index over the trailing three years, and it has topped the aforementioned XLE by about 15 percentage points since inception. That alone would be enough to put PINK among the market’s best ETFs.

But there’s one more kicker: PINK is a 100% pro bono ETF that donates all net profits from fees to the Susan G. Komen breast cancer organization. From inception through June 30, 2026, the fund has given $450,000 to the cause.

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