Healthcare ETFs Mix Defensive Holdings With Targeted Bets

Healthcare exchange-traded funds combine large-cap defensive exposure with niche strategies focused on biotechnology, pharmaceuticals and weight-loss treatments. Adults 65 and older account for 18% of the U.S. population, and the Bureau of Labor Statistics projects 8.4% employment growth in healthcare and social assistance from 2024 to 2034.

Broad sector funds such as the State Street Health Care Select Sector SPDR Fund (XLV) include pharmaceutical, biotechnology, medical device, managed care and healthcare services companies. On June 9, XLV’s top holdings were Eli Lilly (16%), Johnson & Johnson (10%), AbbVie (7%), UnitedHealth Group (7%) and Merck (5%). Sector weights were about 38% pharmaceuticals, 19% providers and services, 18% biotechnology and 16% equipment and supplies.

Biotechnology ETFs concentrate exposure on clinical-stage research and respond to trial results and regulatory decisions. The iShares Biotechnology ETF (IBB) tracks U.S.-listed biotech stocks and tends to include larger firms such as Vertex, Amgen and Gilead. The SPDR S&P Biotech ETF (XBI) uses a modified equal-weight approach that raises the influence of smaller companies. The ALPS Medical Breakthroughs ETF (SBIO) targets small- and mid-cap biotech companies with at least one drug in Phase II or III trials and market capitalizations between $200 million and $5 billion; holdings include Alkermes, Kymera Therapeutics and Spyre Therapeutics.

Pharmaceutical ETFs focus on established drugmakers with commercial products and steadier cash flows. The VanEck Pharmaceutical ETF (PPH) holds about 25 large, liquid U.S.-listed pharmaceutical companies and includes U.S.-listed shares of international drugmakers; its top names include Eli Lilly, Novartis and Merck. The iShares Pharmaceuticals ETF (IHE) concentrates on U.S. pharmaceutical companies and lists Eli Lilly, Johnson & Johnson and Royalty Pharma among its largest positions; it excludes international companies such as Novartis and Novo Nordisk.

Thematic ETFs tied to obesity treatments track companies involved in GLP-1 drugs and treatment delivery. The Amplify Weight Loss Drug & Treatment ETF (THNR) follows an index limited to 20 companies and allocates roughly two-thirds to pharmaceuticals and one-third to biotech; top holdings include Eli Lilly, Novo Nordisk and Amgen. The actively managed Roundhill GLP-1 & Weight Loss ETF (OZEM) selects pure-play and diversified companies involved in GLP-1 production, treatment enablers and supply-chain firms. Eli Lilly shares rose nearly 8% over five trading days through June 9, 2026 after news about its retatrutide program.

Healthcare employment rose 2.5% year over year in May 2025 while total nonfarm payrolls were relatively flat. The BLS projects the healthcare and social assistance sector will add roughly two million jobs from 2024 to 2034, making it the fastest-growing major industry sector over that period.

ETF structures provide different exposures: broad funds offer large-cap sector access, biotech ETFs concentrate on clinical-stage companies, pharmaceutical ETFs emphasize established drugmakers, and weight-loss ETFs focus on GLP-1-related companies and treatment delivery.