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Aug. 23, 2018, 3:17 a.m. EDT

These 7 little-known health-care ETFs are up 20%-plus in 2018

The exchange traded funds have more than tripled the returns of the S&P 500 this year

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By Jeff Reeves, MarketWatch


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While technology stocks tend to make the flashiest headlines, the health-care sector remains one of the most consistent outperformers.

The top health-care exchange traded fund (ETF) by assets, the $18 billion Health Care Select SPDR ETF /zigman2/quotes/205918244/composite XLV -0.15% , has gained about 10% this year vs. 6% for the S&P 500 Index /zigman2/quotes/210599714/realtime SPX -1.12% . And longer term, it’s up about 205% in 10 years vs. about 145% for the S&P 500.

The flagship XLV fund is not alone, either. The No. 2 health-care-oriented ETF by assets, the $9 billion iShares Nasdaq Biotechnology ETF /zigman2/quotes/206189322/composite IBB +0.51% , is up about 7% this year to slightly outperform the broader market, but has done even better in the long term; the shares are up about 330% over 10 years.

It’s no surprise, then, that investors closely follow these health-care funds and continue to invest plenty of funds in the leaders. However, there is a variety of more tactical ETFs to play in this sector beyond popular health-care or biotechnology funds.

Here are seven top-performing health-care ETFs that have trounced the S&P 500 in 2018, and have doubled the 10% return of the popular XLV fund.

Janus Henderson Obesity ETF

2018 performance: 20% vs. 6% for the S&P 500

There are plenty of complex mega-trends in health care, including the demographic shift that is resulting in a growing population of older Americans needing more services as well as a favorable regulatory environment that is streamlining research into “orphan drugs” to target diseases with few effective treatments. Then there’s the broader and much simpler health issue of overweight Americans, with nearly four in 10 Americans categorized as obese, according to the Centers for Disease Control.

The Janus Henderson Obesity ETF is a way to profit from this trend, with holdings that include diabetes-treatment company Novo Nordisk /zigman2/quotes/203484366/composite NVO -0.19% and dialysis provider DaVita /zigman2/quotes/204229673/composite DVA -3.13% as well as weight loss and nutrition plays like Herbalife /zigman2/quotes/201199224/composite HLF -2.17% and Medifast /zigman2/quotes/204273018/composite MED -0.19% . In an age of obesity, investors can fatten their wallet with targeted plays like this on that trend.

iShares U.S. medical-devices ETF

2018 performance: 20% vs. 6% for the S&P 500

While drugmakers get a lot of attention, either via Big Pharma stocks that offer dividends or small-cap biotechs that offer impressive growth potential, many investors overlook the boring medical-products companies that deliver the tubes, pumps and tools that are necessary to make medical facilities function.

The iShares U.S. Medical Devices ETF /zigman2/quotes/203771886/composite IHI -0.66%   offers a way to play this corner of health care, however, with top holdings that include health-care products giants such as Medtronic /zigman2/quotes/206816578/composite MDT -0.19% , Baxter International /zigman2/quotes/207334572/composite BAX +0.79% and Edwards Lifesciences /zigman2/quotes/205745196/composite EW -0.59% . While some of the products offered by these companies are indeed high-tech, such as artificial heart valves, many are less glamorous, such as catheters and blood-pressure cuffs. But despite their flash, these items are staples, and medical offices and hospitals nationwide remain big revenue sources for these companies.

iShares U.S. Healthcare Providers ETF

2018 performance: 22% vs. 6% for the S&P 500

/zigman2/quotes/205918244/composite
US : U.S.: NYSE Arca
$ 105.54
-0.16 -0.15%
Volume: 8.65M
Sept. 18, 2020 4:00p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,319.47
-37.54 -1.12%
Volume: 4.09B
Sept. 18, 2020 5:15p
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/zigman2/quotes/206189322/composite
US : U.S.: Nasdaq
$ 136.32
+0.69 +0.51%
Volume: 2.64M
Sept. 18, 2020 4:00p
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/zigman2/quotes/203484366/composite
US : U.S.: NYSE
$ 69.44
-0.13 -0.19%
Volume: 878,169
Sept. 18, 2020 4:00p
P/E Ratio
26.70
Dividend Yield
1.34%
Market Cap
$161.58 billion
Rev. per Employee
$409,726
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/zigman2/quotes/204229673/composite
US : U.S.: NYSE
$ 87.32
-2.82 -3.13%
Volume: 2.45M
Sept. 18, 2020 4:00p
P/E Ratio
13.95
Dividend Yield
N/A
Market Cap
$10.65 billion
Rev. per Employee
$146,781
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/zigman2/quotes/201199224/composite
US : U.S.: NYSE
$ 48.34
-1.07 -2.17%
Volume: 1.56M
Sept. 18, 2020 4:00p
P/E Ratio
22.68
Dividend Yield
N/A
Market Cap
$6.39 billion
Rev. per Employee
$549,640
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/zigman2/quotes/204273018/composite
US : U.S.: NYSE
$ 173.61
-0.33 -0.19%
Volume: 231,233
Sept. 18, 2020 4:00p
P/E Ratio
27.12
Dividend Yield
2.60%
Market Cap
$2.04 billion
Rev. per Employee
$1.19M
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/zigman2/quotes/203771886/composite
US : U.S.: NYSE Arca
$ 295.75
-1.97 -0.66%
Volume: 106,521
Sept. 18, 2020 4:00p
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/zigman2/quotes/206816578/composite
US : U.S.: NYSE
$ 107.60
-0.21 -0.19%
Volume: 6.27M
Sept. 18, 2020 4:00p
P/E Ratio
32.95
Dividend Yield
2.16%
Market Cap
$144.64 billion
Rev. per Employee
$353,777
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/zigman2/quotes/207334572/composite
US : U.S.: NYSE
$ 82.97
+0.65 +0.79%
Volume: 5.50M
Sept. 18, 2020 4:00p
P/E Ratio
46.52
Dividend Yield
1.18%
Market Cap
$42.00 billion
Rev. per Employee
$222,540
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/zigman2/quotes/205745196/composite
US : U.S.: NYSE
$ 83.20
-0.49 -0.59%
Volume: 3.59M
Sept. 18, 2020 4:00p
P/E Ratio
71.50
Dividend Yield
N/A
Market Cap
$51.73 billion
Rev. per Employee
$290,844
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