Summary: The healthcare industry is never going away, as the need for health products, medications, and medical devices is simply the inevitable reality of our existence. In this guide, we present 3 of the best medical device ETFs based on volume that you can invest in and diversify your portfolio. To invest in the ETFs on our list, you can open a trading account with an online investment platform such as Interactive Brokers.
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What are medical device ETFs?
Medical device ETFs
Medical devices include a wide range of products, for example, diagnostic equipment, screening devices, surgical instruments, etc. Thus, investing in medical device ETFs can be a solid way to gain exposure to a wider range of companies within the medical industry and diversify your portfolio without having to invest in individual stocks.
3 best medical device ETFs
The medical device market is valued at almost $640 billion as of January 2024, and it’s expected to grow to almost $900 billion by the end of the decade, according to some analysts. Thus, it’s hardly surprising that a growing number of investors are eyeing medical device stocks and ETFs.
As the market is large (and still growing), investors will have a lot of options at their disposal. The top 3 medical device ETFs to check out right now, however, are:
- iShares U.S. Medical Devices ETF (IHI);
- SPDR S&P Health Care Equipment ETF (XHE);
- First Trust Indxx Medical Devices ETF (MDEV).
Note
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–How to Buy Edwards Lifesciences Stock;
–How to Buy InMode Stock.
Let’s explore each of them in more detail.
1. iShares U.S. Medical Devices ETF (IHI)
Net assets as of January 2024: ~$5.5 billion
Expense ratio as of January 2024: 0.40%
iShares U.S. Medical Devices ETF focuses on medical device manufacturers only. It comprises companies such as Abbott Laboratories (NYSE: ABT), Thermo Fisher Scientific (NYSE: TMO), Medtronic (NYSE: MDT), and other smaller-scale companies, at least compared to their major pharmaceutical competitors. As such, the IHI fund is positioned to provide investors with well-balanced exposure to the industry, especially investors seeking to diversify their overall exposure without investing in major players in the industry.
IHI price today
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2. SPDR S&P Health Care Equipment ETF (XHE)
Net assets as of January 2024: ~$350 million
Expense ratio as of January 2024: 0.35%
SPDR S&P Health Care Equipment ETF (XHE) has a rather narrow focus, specializing in healthcare equipment and supply manufacturers, such as Abiomed (NASDAQ: ABMD), Glaukos (NASDAQ: GKOS), and Silk Road Medical (NASDAQ: SILK). As such, it chiefly appeals to investors aiming to strategically orient their investments to match a specific sector of the market. However, the underlying index is well-crafted, so it’s a solid diversification choice for other kinds of investors as well. Note, though, that the fund is rather US-centric.
XHE price today
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3. First Trust Indxx Medical Devices ETF (MDEV)
Net assets as of January 2024: ~$3 million
Expense ratio as of January 2024: 0.70%
First Trust Indxx Medical Devices ETF (MDEV) focuses on the top 50 companies by market capitalization in the medical device sector, or rather in companies that generate a minimum of 50% of their revenue by developing equipment, instruments, and machines used in the healthcare industry, all while boating a minimum market capitalization of $500 million. As such, the fund undergoes regular reconstitution and rebalancing to ensure it caters to investors with their sights on the top players in the sector.
MDEV price today
Your capital is at risk.
Where to buy medical device ETFs?
ETFs are traded as stocks, so they’re available on a number of investor platforms online. To invest in medical device ETFs on our list, we recommend using Interactive Brokers, a platform offering:
- Commission-free stock trading;
- Global stock-trading on 90+ market centers;
- Fractional shares available;
- Extra income on fully paid shares;
- Lowest financing rates for margin accounts in the industry;
- No account minimum.
Best Platform for Worldwide Stock Trading & Investing
-
Highly trusted multi-asset broker with clients in over 200 countries
-
Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
-
Low commissions starting at $0 with no platform fees or account minimums
-
Easily fund your account and trade assets in 26 currencies
-
IBKR pays up to 4.58% interest on cash balances of $10k or more
Pros and cons of investing in medical device ETFs
Pros
- Diversification: ETFs can offer investors exposure to assets other than stocks and bonds. Moreover, they are inherently diverse, and as such, they can help you invest in a broader range of sectors and companies or target a very specific niche;
- Liquidity: ETFs are traded like stocks, so you can sell them rather easily;
- Dividend reinvestments: When you invest in funds, all dividends generated by assets in the fund are automatically reinvested;
- Growing industry: The medical industry is large and growing, and the medical device sector is estimated to reach a value of around $900 billion by the end of the decade;
- Hands-off investments: ETFs are usually professionally managed, so you don’t need a lot of experience if you want to invest in them.
Cons
- You risk concentrating on one niche: If you invest in niche ETFs, you may suffer losses if that niche takes a market hit;
- Market timing: With niche funds, it can often be hard to time the market and figure out when to invest and when to sell;
- Sensitive to speculation: If a certain niche becomes trendy and attracts a lot of speculators, you risk falling for unwarranted hype.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about medical device ETFs
Is there an ETF for medical device companies?
Yes, there are ETFs tracking the performance of medical device companies. Some of them include iShares U.S. Medical Devices ETF, SPDR S&P Health Care Equipment ETF, and First Trust Indxx Medical Devices ETF.
Is IHI a good investment?
iShares U.S. Medical Devices ETF (IHI) can be a solid investment for investors looking to invest in smaller-scale companies within the medical device sector.
What is the best medical ETF?
Some of the best medical device ETFs to buy in 2024 based on volume are iShares U.S. Medical Devices ETF, SPDR S&P Health Care Equipment ETF, and First Trust Indxx Medical Devices ETF.
Are medical device ETFs a safe investment option?
ETFs are a safe investment if approached in the right way. They are traded like stocks, but they are inherently more diverse, so with a correct trading strategy, you can craft a robust portfolio to match your investment needs and respond well to market movements.
Where to buy medical device ETFs?
You can buy medical device ETFs on an online investment platform such as Interactive Brokers.
How to buy medical device ETFs?
To buy medical device ETFs, you can open an account with an online investment platform such as Interactive Brokers.
Best Platform for Worldwide Stock Trading & Investing
-
Highly trusted multi-asset broker with clients in over 200 countries
-
Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
-
Low commissions starting at $0 with no platform fees or account minimums
-
Easily fund your account and trade assets in 26 currencies
-
IBKR pays up to 4.58% interest on cash balances of $10k or more
