2 Biggest Medical Device ETFs in 2022
With multiple holdings, medical device ETFs provide immediate diversification to investors, an important feature in the medical device market.
Exchange-traded funds (ETFs) are a popular investment strategy, and generally contain a variety of publicly traded companies under one stock symbol, often with a focus on a specific sector.
Depending on the ETF, investors may be able to track up-and-coming companies, get exposure to top firms or a mix of both. Aside from stocks, some ETFs also track commodities or bonds. In the healthcare industry, medical device ETFs bring together companies that go to great lengths to develop pharmaceutical-based technology that can improve the lives of patients.
To help investors make decisions when it comes to medical device ETFs, here the Investing News Network provides a brief breakdown of what ETFs are and a look at which medical device ETFs are available to buy.
What is an exchange-traded fund?
ETFs are similar to mutual funds and trade on exchanges like any other standard stock. ETFs are appealing because they give investors the ability to hone in on a specific market area without investing in individual companies.
Put simply, ETFs reduce the risk of investing by providing access to a larger pool of companies — instead of going all in for one company, ETFs lets investors pick an area that interests them and suffer less financially if one company under the ETF’s umbrella underperforms. In this way, ETFs allow investors to enter the market confidently and hopefully enjoy long-term capital gains.
Like many areas of the life science space, the medical device sector can be volatile, making ETFs particularly appealing. For example, if a company in a medical device ETF fails a clinical trial or receives negative feedback from the US Food and Drug Administration, ETF investors will largely be protected from any share price drop the medical device maker might have.
On the other hand, if a company in a medical device ETF sees a major gain, that increase will also be muted for ETF investors. That is why some investment professionals prefer to take their chances by adding individual stocks to their portfolios.
Medical device ETFs to consider
1. iShares US Medical Devices ETF (ARCA:IHI)
The iShares US Medical Devices ETF was launched in 2006 and tracked 67 holdings as of November 14, 2022. This iShares ETF’s top three constituents by weight are:
- Abbott Laboratories (NYSE:ABT): Abbott Laboratories’ medical devices are geared towards vascular disease, diabetes and vision care.
- Thermo Fisher Scientific (NYSE:TMO): The company’s devices are made primarily for experts such as lab workers. Thermo Fisher Scientific has products in a variety of areas, including cellular analysis, synthetic biology and molecular biology.
- Medtronic (NYSE:MDT): Medtronic’s devices aim to relieve pain and restore health. The company’s areas of focus include diabetes, cardiac and vascular ailments, minimally invasive therapies and restorative therapies.
2. SPDR S&P Health Care Equipment ETF (ARCA:XHE)
Formed on January 26, 2011, the SPDR S&P Health Care Equipment ETF tracked 83 holdings as of November 14, 2022. Some of the top holdings in this fund’s portfolio are:
- Abiomed (NASDAQ:ABMD): Headquartered in Massachusetts, Abiomed develops and manufactures temporary external and implantable mechanical circulatory support devices.
- DexCom (NASDAQ:DXCM): This San Diego-based medical device company develops and commercializes continuous glucose monitoring systems for diabetes management.
- Intuitive Surgical (NASDAQ:ISRG): This medical device firm is the maker of the da Vinci surgical and Ion endoluminal systems, robotic products designed to improve clinical outcomes for patients through minimally invasive surgery.
This is an updated version of an article originally published by the Investing News Network in 2016.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.