Our top pick for
Building a portfolio
The healthcare sector is large and complex. Investors must be wary of governmental regulations and political shifts before allocating funds.
Healthcare stocks belong to the healthcare sector of the stock market — one of 11 sectors defined by the Global Industry Classification Standard. Companies within the healthcare sector provide medical services, including insurance, medical equipment and pharmaceuticals.
The healthcare sector is large, accounting for nearly one-fifth of the overall gross domestic product (GDP) within the US. The healthcare sector is also complex, given government and professional licensing regulations, research costs and the rapid evolution of the medical field.
The healthcare sector can be further divided into the following major industries:
There are two ways to invest in the healthcare sector: individual stocks or exchange-traded funds (ETFs). Individual stocks offer targeted investment opportunities but have limited market exposure. Sector-tracking ETFs are more diverse and less risky than individual stocks but are accompanied by expense ratios.
Before you can invest, you’ll need a brokerage account. Here’s how the investment process works:
Popular ETFs in the healthcare sector include:
The graph below tracks the Health Care Select Sector SPDR Fund (XLV). Tracking ETF performance is one way to measure how the sector as a whole is doing.
Healthcare is a human necessity. This means the demand for healthcare services typically remains unchanged, regardless of how other industries rise and fall. Investing in well-established healthcare stocks can provide a cushion of security in an aggressive-growth portfolio.
Healthcare stocks also offer investors the opportunity to fund medical research. As the field continues to expand, investors can support research efforts seeking to cure disease.
The medical field is complicated, and if you don’t understand what a company does or how it operates, you may want to think twice before investing.
Government legislation is another major consideration for healthcare investors. Sweeping shifts in policy — the Affordable Care Act, for example — have the power to trigger significant volatility in this sector. And the FDA has the power to make or break fledgling pharmaceutical companies. If you choose to invest in this sector, keep an eye on political shifts and regulatory changes.
To purchase stocks or ETFs, you’ll need a brokerage account. Use this table to compare your options and find the right fit.
*Signup bonus information updated weekly.
The healthcare sector offers the opportunity for profit but carries its own unique set of risks. Whether or not this sector belongs in your portfolio depends on your risk tolerance and investment goals. Explore your brokerage account options across multiple trading platforms for the account best suited to your needs.
What you need to know to start building your retirement nest egg.
Invest in growth ETFs to access companies with high growth potential.
Earn passive income with the right investment.
Contrarian investing can help you profit by going against the herd. Learn more.
Custodial brokerage accounts for kids — because it’s never too early to start saving and investing.
Put your money where your mouth is by rethinking how you invest to support BIPOC, LGBTQ+ and other marginalized communities.
Features, pros and cons to consider before you sign up with Farther Financial.
A stock’s price-to-earnings ratio can help you decide whether to include it in your portfolio.
Features, fees and complaints to consider before you apply for a T. Rowe Price account.
If you’re searching for a platform that’s similar to TradeStation, here are 5 brokers to consider.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.