Healthcare ETFs for Making an Obamacare Play

Joel Anderson  |

The year’s hottest ETFs, not including those tracking green energy, have been ones consisting primarily of biotech stocks. Precisely why is hard to say. Some might speculate that the risk-on environment in equities markets for much of the year has allowed more investors to make risky biotech plays that are prone to pretty big swings. However, regardless of why, the biggest biotech ETFs are on a pretty strong run.

And healthcare ETFs could make for pretty interesting plays over the coming months/years. Regardless of how one feels about Obamacare, it’s clear that it’s going to be a major part of the healthcare sector for at least the near-term future. Whether it crashes out spectacularly or ultimately overcomes its early stumbles to cement itself onto American society (or, most likely, somewhere in between), health insurers, pharmaceutical companies, and even nursing homes are likely to experience great change.

And with that change could come great volatility. The sort that can make traders drool. However you see Obamacare playing out, there’s probably a play in it for the healthcare sector. And one of the best ways to make that play may be with healthcare ETFs tracking equities in the sector. Here’s a few of the different options. And, for reference, the S&P 500's YTD performance is currently at 23.56 percent.


SPDR Health Care Select Sector Fund ($XLV)

Tracks: Health Care Select Sector Index

YTD Performance: 32.72 percent

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Play: This SPDR fund is a broad play made up of a variety of types of companies from across the sector.


iShares Nasdaq Biotechnology Index Fund ($IBB)

Tracks: Nasdaq Biotechnology Index

YTD Performance: 49.99 percent

Play: This would be a narrower play than the XLV, focusing on biotech stocks like Gilead Sciences (GILD) or Biogen (BIIB) .


SPDR S&P Biotech ETF ($XBI)

Tracks: S&P Biotechnology Select Industry Index

YTD Performance: 35.81 percent

Play: A similar biotech play to IBB, but one tracking an index with fewer companies.


SPDR S&P Pharmaceuticals ETF ($XPH)

Tracks: S&P Pharmaceuticals Select Industry Index

YTD Performance: 40.12 percent

Play: Focused play of pharmaceutical companies listed on the S&P 500.


iShares Dow Jones U.S. Medical Devices Index ($IHI)

Tracks: Dow Jones U.S. Select Medical Equipment Index

YTD Performance: 32.46 percent

Play: Made up almost exclusively of medical device makers. Watch the news for reports about the future of the controversial medical device tax included in the Affordable Care Act as the outcome there could prove important for this industry.


iShares Dow Jones U.S. Health Care Providers Index Fund ($IHF)

Tracks: Dow Jones U.S. Select Health Care Providers Index

YTD Performance: 28.27 percent

Play: This includes some of the nation’s largest insurers, and could be a way to bet on their success/failure in the new health insurance marketplaces.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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