The U.S. health care sector hasn’t escaped the tariff and trade wars, as the industry relies on imports to buy everything from medical devices to the garments worn by medical staff. The China tariffs are particularly burdensome to the American health care sector, as Chinese manufacturers make about 27% of global hospital supply products.
The Trump administration’s move to boost China tariffs up to 145% will likely impact the costs of goods for hospitals, clinics and health care centers across the U.S. The pharmaceutical industry could also see rising costs, which is expected to boost prescription drug prices.
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Burdened by continuing troublesome inflation and cuts to federal health agencies, health care sector stocks are barely treading water. The S&P 500 Health Care Sector Index was flat year to date as of April 15 and down 6% over the past month as tariff troubles have intensified. Health care exchange-traded funds (ETFs), which cover key sectors like biotechnology, pharmaceuticals, research services, home health care, hospitals, long-term-care facilities, and medical equipment and supplies, are also impacted by rising tariffs, high inflation and squeezed government budgets.
In such a volatile environment, it may be easier to land a good health care ETF at a lower price, which can set an investor up for robust returns when the smoke clears. Here’s a snapshot of six health care ETFs with stable vital signs now:
| Health Care Fund | Expense Ratio | 30-Day SEC Yield* |
| iShares Global Healthcare ETF (ticker: IXJ) | 0.41% | 1.4% |
| Vanguard Health Care ETF (VHT) | 0.09% | 1.5% |
| Fidelity Select Health Care (FSPHX) | 0.65% | 0.02%** |
| Health Care Select Sector SPDR ETF (XLV) | 0.08% | 1.7% |
| Invesco S&P 500 Equal Weight Health Care ETF (RSPH) | 0.40% | 0.8% |
| SPDR S&P Biotech ETF (XBI) | 0.35% | 0.2% |
*As of March 31.**Trailing-12-month yield as of March 31.
iShares Global Healthcare ETF (IXJ)
Tariffs aside (and that situation remains a big deal), health care ETFs have historically given investors a dose of stability. The sector usually remains upright during volatile economic times like the one investors are seeing now. The $4 billion iShares Global Healthcare ETF is a good example of that defensive stance. While the fund has only returned 0.6% as of April 15, its five-year track record stands at a sturdy 7.1% return by net asset value, compared with 4.2% for its category, according to Morningstar. The fund also comes with a 1.4% yield, but it does have a moderately pricey expense ratio of 0.41%.
IXJ has several features that should improve its fortunes going forward. The fund’s companies have made big bets on artificial intelligence and robotics, two technologies on the rise in health care. Health care is also deemed a value sector, and industry analysts expect value stocks to outperform in 2025. If you want in on a stable long-term play and want to take the guesswork out of picking sector stocks, IXJ is a good selection in tough times.
Vanguard Health Care ETF (VHT)
With $16.5 billion in assets under management, this fund is a larger, though comparable, peer to the iShares Global Healthcare ETF. No matter what happens to the economy and U.S. households, people still have to pay for health care for preventive treatment and recuperative reasons. VHT offers an ample array of consumer health care stocks, from drugstore chains to the biotech firms that make weight loss and mental health treatments. Familiar names like Eli Lilly and Co. (LLY), UnitedHealth Group Inc. (UNH), AbbVie Inc. (ABBV) and Johnson & Johnson (JNJ) make up 28% of the fund, providing a measure of stability.
The fund is down 1.2% in 2025, but that’s not dreadful considering the S&P 500 is down 8.2% as of April 15. VHT has a tidy +8.2% five-year annual performance average and provides a decent 1.5% yield, with a 0.09% expense ratio, making it one of the least expensive funds compared with its primary competitors.
Once the tariff and trade wars abate, global consumers will resume paying up for diabetes and weight loss drugs (Keytruda and Ozempic, in particular) and asthma and autoimmune drugs, meaning health care funds should bounce back in a big way. That’s especially the case with the massive wave of Americans hitting their 50s, 60s and 70s, which will also contribute to additional spending.
Fidelity Select Health Care (FSPHX)
This Fidelity health care fund is in sick bay in 2025, down 3.1% year to date. Underperformance may trigger anxiety among fundholders, but the fund’s dip doesn’t look as bad when compared to the 6.5% drop in its peer category so far this year. Except for 2022, when the fund sank 12.8%, FSPHX has been a reliable producer for fund investors over the past eight years.
FSPHX focuses on what investors generally want to see from a sector fund, diversifying its assets globally with heavy allocations to recognizable names in health care and medicine, such as Boston Scientific Corp. (BSX) accounting for 11.7% of the fund, UnitedHealth and Eli Lilly. Plus, fund manager Edward Yoon has been at the helm since 2008, so major market gyrations aren’t going to rattle a seasoned fund chief. BSX has returned 39.7% over the past 12 months and a competitive 5.5% year to date.
The ETF is a tad expensive, with a 0.65% expense ratio and a tiny trailing yield of 0.02%. What the fund does offer, however, is a shot of biotech stocks like Regeneron Pharmaceuticals Inc. (REGN), which should outperform in a recovery scenario.
Regarding long-term performance, the fund has a three-star Morningstar rating and a decent 10-year annualized total return of 6.4%.
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Health Care Select Sector SPDR ETF (XLV)
This $38 billion fund tracks the Health Care Select Sector Index, holding 60 stocks with a 100% health care focus. It’s highly cost-efficient, with a 0.08% expense ratio and a 1.7% dividend yield.
Rated five stars by Morningstar, XLV is only up 0.5% year to date, a sign that investors are taking a moderately positive view of the fund. Given its non-cyclical foundation, the fund also offers solid defense against any market downturns in 2025. The health care sector should find firmer ground after the tariff uncertainty passes; however, there’s no clear timetable for when that’s happening.
Philosophically, the fund targets stable health care companies with reliable pricing and yield. That’s why industry stalwarts like LLY, UNH, JNJ and ABBV are at the top of its holdings (these stocks make up about 36% of the fund as of April 14). The fund also reduces risk by diversifying among pharmaceuticals, health care services, and equipment and supplies stocks. Its fund strategy may be vanilla, but safety seekers won’t mind.
XLV’s 10-year annualized return by net asset value stands at 8.2%, against 4.4% for its category. If you’re looking for a health care ETF with a solid dividend and broad exposure to big brand names, XLV could be a good fit for the rest of 2025.
Invesco S&P 500 Equal Weight Health Care ETF (RSPH)
This Invesco health care ETF is down 4.7% through mid-April, but it has an 11.4% average annual return over the past 15 years. The fund is designed to offer ample exposure to the S&P 500 Equal Weight Healthcare Index, minus fees and expenses.
When RSPH fund managers talk about equal-weight ETFs, they talk about funds like RSPH. Allocation per top-10 holding is in the 2% range, giving the fund the balance that managers seek. That top 10 includes familiar names such as UnitedHealth and Humana Inc. (HUM), as well as lesser-known sector names like Centene Corp. (CNC) and Elevance Health Inc. (ELV).
Fund investors pay a relatively higher fee than with larger health care ETFs, at 0.4%, and get a relatively weaker yield compared with XLV and VHT, at 0.8%. The fund also gets a four-star review from Morningstar; on the pricing point, for example, the ratings firm says RSPH offers good cost value when ranked against its direct peers.
SPDR S&P Biotech ETF (XBI)
Investors looking for broad exposure to biotechnology stocks can get this ETF at a low price. There’s no sugarcoating it, however: XBI is in a performance rut right now, down 15% against its category’s average loss of 6.5% and its benchmark’s 0.5% dip.
Slow drug-approval processes and significant Food and Drug Administration turnover haven’t helped the biotech industry in 2025. Additionally, a sales slump is occurring in key areas like gene therapy, where shares of affected biotech companies are down by as much as 100% in 2025. Yet industry analysts see opportunity for investors amidst the carnage, with TD Cowen biotech analyst Yaron Werber calling for a significant rebound later in the year.
Structurally, this passively managed SPDR fund tracks the performance of the S&P Biotechnology Select Industry Index, which primarily includes companies in the biotech segment of the S&P Total Market Index. XBI favors smaller and midsize biotech companies, which adds a higher element of risk to the fund. As far as size goes, at $5 billion in assets, XBI is one of the larger biotech-flavored ETFs.
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6 Best Health Care Funds and ETFs for 2025 originally appeared on usnews.com
Update 04/16/25: This story was previously published at an earlier date and has been updated with new information.
