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Taking a position in a life science exchange-traded fund (ETF) provides exposure to a basket of stocks focused on the healthcare sector, while mitigating the risks of holding shares in a single company.
While ETFs provide diversification by their nature, fund managers often narrow down their offerings to follow a specific aspect of the market — for example, biotech or pharma. They also typically adjust the weight of ETF holdings to match movements in the life science industry in an effort to give investors the best possible returns.
Performance and asset under management (AUM) data was gathered on November 14, 2024, and the 10 life science ETFs listed by ETFdb.com were considered. Read on to learn more about the top-performing life science ETFs year-to-date.
1. SPDR Biotech ETF (ARCA:XBI)
Year-to-date gain: 16.8 percentAUM: US$7.82 billion
Launched in 2006, the SPDR Biotech ETF tracks the performance of the S&P Biotechnology Select Industry Index, focusing exclusively on US stocks. The fund has an expense ratio of 0.35 percent, and its five year return comes in at 5.01 percent.
Of the fund’s 144 holdings, 76 percent are large and mid-cap companies. The fund’s top holdings include Incyte (NASDAQ:INCY), United Therapeutics (NASDAQ:UTHR) and Gilead Sciences (NASDAQ:GILD).
2. First Trust NYSE Arca Biotechnology Index Fund (ARCA:FBT)
Year-to-date gain: 13.1 percentAUM: US$1.21 billion
The First Trust NYSE Arca Biotechnology Index Fund tracks the price and yield of an equity index called the Amex Biotechnology Index. Founded in 2006, the fund’s expense ratio is 0.56 percent. Its five year return comes in at 6.71 percent.
With 31 holdings, this fund is much smaller than the other ETFs on this list. It is primarily focused on large-cap US biotech companies, although it has exposure to some firms in Europe. Its top holdings include Exelixis (NASDAQ:EXEL), Intra-Cellular Therapies (NASDAQ:ITCI) and Incyte.
3. Vanguard Health Care Index Fund ETF (ARCA:VHT)
Year-to-date gain: 11.9 percentAUM: US$17.95 billion
The Vanguard Health Care Index Fund ETF is a broad fund with healthcare firms from varied industries that came to market in 2004. It’s achieved returns of 11.07 percent over the last five years. The ETF’s expense ratio is very low at 0.1 percent.
At 414, this fund has the most holdings of the life science ETFs on this list, with more than 86 percent being large-cap companies predominantly in the United States. Its top holdings by weight include Eli Lilly (NYSE:LLY), UnitedHealth Group (NYSE:UNH) and AbbVie (NYSE:ABBV).
4. iShares U.S. Medical Devices ETF (ARCA:IHI)
Year-to-date gain: 11.7 percentAUM: US$4.9 billion
The iShares U.S. Medical Devices ETF was launched in 2006 and, as the name suggests, focuses on medical device companies in the United States. The fund’s five-year return stands at 8.27 percent. This biotech ETF has an expense ratio of 0.4 percent.
This biotech fund is concentrated on large-cap companies, representing 89 percent of its holdings. Its top holdings by weight include Abbott Laboratories (NYSE:ABT), Intuitive Surgical (NASDAQ:ISRG) and Stryker Corporation (NYSE:SYK).
5. iShares U.S. Healthcare ETF (ARCA:US)
Year-to-date gain: 11.7 percentAUM: US$3.36 billion
The iShares U.S. Healthcare ETF launched in 2000, making it the longest-running ETF on this list. EFTdb.com warns investors that ‘IYH probably doesn’t have much use for those constructing a long-term, buy-and-hold portfolio; this ETF is a more useful tool for those looking to establish a tactical tilt towards health care or for use in a sector rotation strategy.’
The fund has an expense ratio of 0.39 percent, and a five-year return rate of 11.12 percent. Of its 109 holdings, 94 percent are large-cap companies. Its top holdings by weight are Eli Lilly, UnitedHealth Group and Johnson & Johnson (NYSE:JNJ).
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
