Sector Alert: 4 Healthcare ETFs Poised for Explosive Growth Now

When it comes to discussing the best ETFs to buy in 2026, the discussion usually starts with tech and artificial intelligence (AI). Healthcare hasn't gotten a lot of attention lately because nobody has been interested in defensive sectors, this sector has been lagging the S&P 500 (SNPINDEX: ^GSPC) by a wide margin, and the macro environment has some challenges.

But we've seen some of that change in 2026. The pullback in tech stocks has allowed for previously unloved areas of the market to emerge. As of Feb. 5, healthcare, utilities, and consumer staples are all outperforming the S&P 500 year to date. As questions remain about the outlook of the U.S. economy, defensive sectors may have a sustainable opportunity to lead again.

As the momentum for healthcare stocks builds, I like four different ways in particular to play it. Whether you choose the broad or more targeted option, each of these has the potential to take advantage of the sector's newfound optimism.

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1. State Street Health Care Select Sector SPDR ETF

The State Street Health Care Select Sector SPDR ETF (NYSEMKT: XLV) would be the plain-vanilla way to invest in the entire sector. It tracks the performance of the Health Care Select Sector Index and provides exposure to companies involved in pharmaceuticals, healthcare equipment, healthcare providers, and other industries.

This fund offers meaningful exposure to all subindustries within this sector, including pharmaceuticals (37%), equipment (20%), biotech (18%), and healthcare providers (16%). If the market continues to migrate away from more speculative investments, it will likely seek out quality companies with reliable cash flows. The healthcare sector checks both boxes. With the growth outlook getting a little murky, big healthcare companies are likely to hold up better.

2. iShares U.S. Healthcare Providers ETF

The iShares U.S. Healthcare Providers ETF (NYSEMKT: IHF) follows the Dow Jones U.S. Select Healthcare Providers Index. It invests in companies of all sizes that are categorized as healthcare providers, such as owners of health maintenance organizations, hospitals, clinics, and dental care facilities.

This group could end up being heavily influenced by what happens with Medicare. If there's discussion in Congress about lowering medical premiums or affordability issues that cause consumers to begin cutting expenses, this group could take a hit. But I think healthcare costs will remain elevated as gridlock in Congress prevents any meaningful legislation from getting passed. That could be a tailwind for providers.

3. iShares U.S. Medical Devices ETF

The iShares U.S. Medical Devices ETF (NYSEMKT: IHI) tracks the Dow Jones U.S. Select Medical Equipment Index. Its goal is to invest in the companies that manufacture healthcare equipment, such as MRI scanners, prosthetics, pacemakers, and X-ray machines.

Many device companies are looking to leverage the AI boom to develop robotics for use in the medical field. A lot of development is still in the early stages, and implementation in the field is still rare. But the amount of money that companies are committing to build out their AI-adjacent offering is likely to speed up revenue and earnings growth rates in this area.

4. SPDR S&P Biotech ETF

The SPDR S&P Biotech ETF (NYSEMKT: XBI) provides exposure to the drug development and discovery area of the healthcare sector. It follows the S&P Biotechnology Select Industry Index and invests in approximately 150 companies in this space.

Biotech is notorious for its boom/bust stories, so investing here comes with extra risk. But the trend toward deregulation could really help. The elimination of bureaucratic red tape and lengthy drug approval processes could speed up the pace of innovation and push more novel drugs to the market faster. The portfolio's equal-weighting strategy also helps spread out some risk.

David Dierking has no position in any of the stocks mentioned. The Motley Fool recommends SPDR Series Trust - SPDR S&P Biotech ETF. The Motley Fool has a disclosure policy.