To The Moon

Against a backdrop of heightened market volatility, the U.S. healthcare sector has maintained relatively resilient performance. Compared with the previous trading session, a pullback in overall risk appetite has led to a clearer internal differentiation among healthcare-related ETFs. Volatility remains more pronounced in biotechnology-focused products, while ETFs centered on large-cap pharmaceuticals and diversified healthcare have exhibited comparatively stable performance. Overall, the defensive characteristics of the healthcare sector continue to provide a degree of support under the current market environment.

From an internal structural perspective, biotechnology-related ETFs have experienced relatively larger drawdowns, whereas products concentrated in large pharmaceutical companies and diversified healthcare have seen more limited declines, though still broadly tracking the broader market’s pullback. The sector’s defensive attributes are primarily underpinned by long-term cash flow visibility and sustained industry demand; however, in the short term, performance remains influenced by shifts in market sentiment and valuation adjustments.

Observing performance across two consecutive trading days, capital allocation within the healthcare sector appears increasingly rational, with differences in risk exposure and structural composition among ETFs emerging as key drivers of short-term performance.

Below are data for the eight U.S. healthcare ETFs I track, based on a screening criterion of ETFs with assets under management exceeding USD 250 million：

SPDR S&P Biotech ETF (XBI):XBI tracks the S&P Biotechnology Select Industry Index and is constructed using a near–equal-weight methodology, with exposure primarily to small- and mid-cap biotechnology companies. The ETF has total assets of approximately USD 8.48 billion, an annual return of 1.46%, and an expense ratio of 0.35%. Due to its diversified holdings and higher sensitivity to sector sentiment, XBI exhibits relatively elevated volatility compared with other healthcare ETFs.

iShares Biotechnology ETF (IBB):IBB tracks the Nasdaq Biotechnology Index, with holdings concentrated in large-cap, more established biopharmaceutical companies. The ETF manages approximately USD 8.61 billion in assets, posts an annual return of 2.02%, and carries an expense ratio of 0.45%. Compared with equal-weight strategies, IBB features higher structural concentration and generally lower volatility, positioning it as a core allocation vehicle within the biotechnology segment.

VanEck Biotech ETF (BBH):BBH primarily targets large-cap biotechnology companies and exhibits a relatively high index concentration, making individual constituents more influential on overall performance. The ETF currently has total assets of approximately USD 394 million, an annual return of 2.38%, and an expense ratio of 0.35%. Its risk profile lies between traditional pharmaceutical ETFs and higher-beta biotechnology products, making it suitable for investors seeking reduced exposure to small-cap volatility.

Fidelity MSCI Health Care Index ETF (FBT):FBT tracks the biotechnology sector using an equal-weight methodology, which helps mitigate single-company event risk. The ETF has total assets of approximately USD 1.40 billion, an annual return of 3.50%, and an expense ratio of 0.40%. In recent structurally driven market conditions, FBT has delivered relatively balanced performance, though it remains among the more volatile segments within the healthcare space.

Invesco Dynamic Biotechnology & Genome ETF (PBE):PBE provides exposure to biotechnology and innovation-driven healthcare themes, employing a multi-factor screening approach. The ETF manages approximately USD 260 million in assets, delivers an annual return of 2.52%, and has an expense ratio of 0.50%. Given its relatively smaller asset base, liquidity and volatility considerations are more pronounced, positioning PBE as a complementary rather than core healthcare allocation.

ARK Genomic Revolution ETF (ARKG):ARKG focuses on frontier areas such as gene editing, precision medicine, and molecular diagnostics, with a growth-oriented investment style. The ETF currently manages approximately USD 1.17 billion in assets, reports an annual return of 1.90%, and carries an expense ratio of 0.75%. Over consecutive trading sessions, this category has exhibited notably higher volatility, with risk exposure exceeding that of traditional healthcare ETFs, making it more suitable for portfolios with higher risk tolerance.

Simplify Health Care ETF (PINK):PINK provides diversified exposure across pharmaceuticals, healthcare services, and broader health-related industries, resulting in a relatively balanced sector composition. The ETF has total assets of approximately USD 345 million, an annual return of 3.88%, and an expense ratio of 0.50%. In the current market environment, its overall volatility has remained comparatively contained, positioning it as a more defensive-oriented option within healthcare allocations.

iShares U.S. Pharmaceuticals ETF (IHE):IHE primarily invests in large-cap U.S. pharmaceutical companies with relatively stable earnings and cash flow profiles. The ETF manages approximately USD 865 million in assets, posts an annual return of 1.56%, and carries an expense ratio of 0.39%. Within the healthcare sector, its risk characteristics are more defensive, and recent drawdowns have been relatively limited.

Taking performance over the past two trading sessions into consideration, U.S. healthcare ETFs continue to exhibit clear structural differentiation within a defensive sector framework. Biotechnology-focused ETFs offer higher upside sensitivity but are accompanied by greater volatility, while traditional pharmaceutical and diversified healthcare ETFs have demonstrated stronger stability under the current market environment.

Note:

Expense Ratio: The net fees paid by investors for the operation of a mutual fund, including fund management fees, expressed as a percentage.

Total Return: Incorporates both price changes and dividend distributions, with dividends reinvested in securities.

Data Sources: Wind, Bloomberg, and Tiger International.