These healthcare ETFs are beating the S&P 500 this year
While market attention has again focused mainly on artificial intelligence and chips this year, one of the most overlooked sectors of recent years has taken the lead. Biotech is having its strongest year since the pandemic boom, and some sector funds are beating the US market by tens of percentage points. The growth is not driven by cheap money, but by concrete clinical data, a record wave of acquisitions, and a re-evaluation of the entire industry. Which funds are benefiting the most from this turnaround, and what risks do they carry?
Key points
Biotech is beating the S&P 500 by tens of percentage points this year. After several years of declines, the sector is returning to the center of investor attention. What is behind such a marked turnaround?
Three ETFs, but three completely different investment strategies. Although they all bet on the same sector, the differences in performance, portfolio composition, and risk are surprisingly large.
The growth is not driven only by investor enthusiasm. Breakthrough clinical trials and a wave of billion-dollar acquisitions are changing expectations about the future of the entire industry.
The best-performing fund is up more than 70% this year. But its long-term history shows why an exceptional annual return does not automatically mean the best investment.
Biotech is growing despite higher interest rates. Can the sector continue at its own pace, or have current prices already priced in an overly optimistic scenario?
The biotech sector went through one of the longest and most painful bear markets in modern history between 2021 and 2024. Higher interest rates made capital more expensive for companies that often do not earn money for years, regulatory uncertainty around the US FDA discouraged investors, and a large part of smaller companies traded at prices close to cash on the balance sheet. This low starting base is one of the reasons why this year's turnaround is so pronounced.
The year 2026 brought a combination of factors that rarely come together at one moment. Large pharmaceutical companies are facing an approaching patent cliff and are buying innovation in whole companies. Clinical trials delivered results that the market called breakthrough. And investors who had avoided the sector for years began to return to it. Interestingly, this is happening in an environment where the US central bank is not cutting rates, but on the contrary raising them. So biotech is not being re-rated this time because of cheaper money, but because of real results.
For investors who do not want to bet on individual companies with clinical trial risk, ETFs are the most accessible route. But each of them approaches the sector completely differently, and therefore their performance this year and risk profiles differ significantly. Which one has the highest potential?
