After years of underperformance, the healthcare sector may finally be waking up. The Health Care Select Sector SPDR Fund (NYSEARCA: XLV), which tracks the largest U.S. healthcare companies, has returned just 7% over the past three years and 8.5% over the last five years, lagging behind the broader market. Even this year, XLV is up only 5.2% year-to-date, once again lagging the S&P 500.
But a new wave of catalysts could change that narrative. Between the prospect of lower interest rates, a significant policy breakthrough on drug pricing, and renewed investor appetite for defensive, high-yielding sectors, healthcare may be positioned for a long-awaited turnaround.
