Use ETFs to Gain Healthcare Exposure After LLY, UNH, MRK Rally

Health stocks drew investor attention this week after three companies reported major developments: Eli Lilly reportedly entered talks to acquire psychedelic firm AtaiBeckley, UnitedHealth posted an earnings beat for the quarter, and Merck won regulatory approval for a new cholesterol pill. Investors are looking to healthcare ETFs to gain exposure to those companies in a single product.

Lilly’s reported acquisition talks coincided with a rise in LLY shares; the stock is up more than 8% year to date. UnitedHealth exceeded analysts’ expectations for the quarter and its shares have gained 25.8% year to date and about 3.8% over the past month. Merck’s cholesterol therapy received approval and its shares rose 3.27% on July 16; MRK is up roughly 19.9% so far this year.

The VanEck Pharmaceutical ETF (PPH), the Vanguard Health Care ETF (VHT) and the State Street Health Care Select Sector SPDR ETF (XLV) are among the funds investors are watching. PPH focuses on pharmaceutical manufacturers, tracks the MVIS US Listed Pharmaceutical 25 Index, charges a 0.36% expense ratio and returned about 26.6% over the past 12 months.

VHT holds a broad set of health-care stocks including Merck, Lilly and UnitedHealth, follows the MSCI US IMI 25/50 Health Care Index, charges a 0.09% expense ratio and returned roughly 24.4% over the last year. XLV tracks the S&P Health Care Select Sector Index, charges a 0.08% expense ratio and posted near 21.5% returns over the same 12-month period.

PPH’s narrower pharmaceutical focus results in higher weightings to drugmakers. VHT and XLV provide broader exposure across drugmakers, insurers, device manufacturers and health-care services. Differences in index methodology, sector weights and fees can affect turnover and returns over time.

ETFs offer a way to hold multiple health-care companies in a single fund and reduce reliance on a single stock’s performance. Investors evaluating these funds should check each ETF’s tracked index, expense ratio and recent performance history.