Exchange-traded funds (ETFs) are a popular investment strategy, and generally contain a variety of publicly traded companies under one stock symbol, often with a focus on a specific sector.
Depending on the ETF, investors may be able to track up-and-coming companies, get exposure to top firms or a mix of both. Aside from stocks, some ETFs also track commodities or bonds.
In the healthcare industry, medical device ETFs bring together companies that go to great lengths to develop medical technologies and equipment that can improve the lives of patients.
What is an exchange-traded fund?
Exchange-traded funds, or ETFs, hold a basket of equities, often focused on a theme or niche. ETFs are appealing because they give investors the ability to hone in on a specific market area without investing in individual companies. While they are similar to mutual funds, ETFs trade on stock exchanges in the same way stocks do.
Put simply, ETFs reduce the risk of investing by providing access to a larger pool of companies — they let investors pick an area that interests them and suffer less financially if one company under the ETF’s umbrella underperforms. In this way, ETFs allow investors to enter the market confidently and hopefully enjoy long-term capital gains.
Like many areas of the life science space, the medical device sector can be volatile, making ETFs particularly appealing. For example, if a company in a medical device ETF fails a clinical trial or receives negative feedback from the US Food and Drug Administration, ETF investors will largely be protected from any share price drop the stock might have.
On the other hand, if a company in a medical device ETF sees a major gain, that increase will also be muted for ETF investors. That’s why some investors prefer to take their chances by adding individual stocks to their portfolios.
Medical device ETFs to consider
Investors keen on medical device ETFs only have three choices, according to ETFdb.com. Other life science ETFs can include medical device stocks in their holdings but cover a broad range of firms, while these three funds offer sector-specific exposure.
Here’s a brief look at the three medical device ETFs available to investors on US exchanges.
1. iShares US Medical Devices ETF (ARCA:IHI)
Total assets under management: US$4.24 billion
The iShares US Medical Devices ETF was launched in 2006 and tracked 50 holdings as of January 8, 2026. IHI has an expense ratio of 0.38 percent.
The majority of its portfolio is made up of large-cap US stocks. Its top three holdings, which combine for over 45 percent of its holdings, are:
2. SPDR S&P Health Care Equipment ETF (ARCA:XHE)
Total assets under management: US$161.1 million
Formed on January 26, 2011, the SPDR S&P Health Care Equipment ETF tracks 67 holdings as of January 8, 2026. This SPDR ETF has an expense ratio of 0.35 percent.
XHE offers exposure to medical device companies of all sizes, with 30 percent of its holdings being large-cap, 28 percent mid-cap, 37 percent small-cap and about 5 percent being micro stocks. The majority are US-based.
Its 67 holdings are relatively equally weighted, and its top holdings include UFP Technologies (NASDAQ:UFPT), Lantheus Holdings (NASDAQ:LNTH) and QuidelOrtho (NASDAQ:QDEL).
3. First Trust Indxx Medical Devices ETF (BATS:MDEV)
Total assets under management: US$2.2 million
The First Trust Indxx Medical Devices ETF launched on June 22, 2021, and aims to replicate the performance of the Indxx Medical Devices Index. MDEV has an expense ratio of percent.
This medical device ETF holds a portfolio of global life science stocks, with significant exposure to North America, European and Asian companies. Its 51 holdings are predominantly large-cap companies at 70 percent, with the remaining 30 percent being mid-cap firms.
The First Trust Indxx Medical Devices ETF’s top holdings include Exact Sciences (NASDAQ:EXAS), Globus Medical (NYSE:GMED) and Intuitive Surgical (NASDAQ:ISRG).
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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