It has been a turbulent start to the year for the healthcare industry, as concerns about major cuts to Medicare and Medicaid coincide with the impact of tariffs on supplies and many other variables. Nonetheless, healthcare stocks have fared well compared to the energy and information technology sectors. The Health Care Select Sector SPDR Fund (NYSEARCA: XLV), an exchange-traded fund (ETF) with a broad portfolio of stocks across the sector that is typically viewed as a benchmark for healthcare names in general, is down less than 2% year-to-date (YTD). By comparison, the S&P 500 is down close to 3% over the same period.
Healthcare can be a tricky area for investors because of the predominance of recently established firms seeking a breakthrough medicine or technology to bring to market. These companies can experience massive share price growth when they see a successful trial or receive approval for a new product, but many also falter before that happens.
