Canadian Healthcare ETFs: Investing in Global Health Index (CAD-Hedged)

Finding the best healthcare ETFs in Canada can be a challenging task, especially given the industry’s vast scope and ever-evolving nature.

Canadian Healthcare ETFs

We will give you a snapshot of the top Canadian healthcare ETFs, spotlighting various sub-sectors such as medical technology, medical office software, virtual healthcare, pharmaceuticals, and biotechnology.

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1. Top Canadian Healthcare ETFs to Invest In

The Canadian healthcare sector presents promising investment opportunities, especially given its positive external factors such as population growth, aging populations, and medical technology advancements.

The market comprises various exchange-traded funds (ETFs) that provide access to diverse healthcare companies at cost-efficient rates.

Some of the best healthcare ETFs in Canada include

  • iShares Global Healthcare Index ETF (XHC) – more here
  • BMO Equal Weight US Healthcare Index ETF (ZUH)
  • TD Global Healthcare Leaders Index ETF (TDOC)
  • iShares Biotechnology ETF (IBB)
  • Vanguard Health Care Index Fund ETF (VHT).


TDOC, TD Global Healthcare Leaders Index ETF, ranks among the best healthcare ETFs in Canada, with its low management expense ratio (MER) of 0.38% and a yield of 1.45%.

The fund holds approximately $31M in assets under management, offering investors a relatively safe and well-performing investment option in the healthcare sector.

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2. Pros and Cons of Investing in Healthcare ETFs

Investing in healthcare ETFs comes with several advantages and disadvantages. On the positive side, ETFs allow investors to access a broad range of healthcare-related companies, providing diversification that can reduce instance-specific risks.

Additionally, healthcare ETFs are known for their cost efficiency, liquidity, convenience, and support for a good cause, as they contribute to a continually growing and resilient sector.

However, there are certain downsides to investing in healthcare ETFs. Potential high costs, limited transparency, limited customization, lack of control over dividends, and over-concentration risk characterise the specific demerits of this investment.

Furthermore, while healthcare ETFs enjoy relative resilience that often withstands economic downturns, they are not immune to market fluctuations influenced by political events, technological developments, and global market forces.

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3. Diversification and Growth Potential in the Healthcare Sector

Canadian healthcare ETFs offer an excellent investment opportunity for investors looking for exposure to the growing healthcare sector.

This sector benefits from several external factors, such as population growth, aging populations, and advancements in medical technology, which contribute to its resilience and growth prospects.

Healthcare-focused ETFs provide exposure to a broad range of healthcare-related companies, including equipment providers, pharmaceuticals, biotech companies, and healthcare services.

Healthcare ETFs, such as the iShares Global Healthcare Index ETF (XHC), BMO Equal Weight US Healthcare Index ETF (ZUH), TD Global Healthcare Leaders Index ETF (TDOC), iShares Biotechnology ETF (IBB), Vanguard Health Care Index Fund ETF (VHT), provide diversified exposure to various companies within the sector.

This diversification helps spread risk and potential returns across several stocks, making healthcare ETFs an attractive investment option.

Moreover, ETFs are favored by investors due to their tax efficiency, low management fees, and the convenience of trading on public exchanges.

The healthcare sector is known for its stability and growth potential, making healthcare ETFs a wise choice for investors seeking a combination of income and long-term capital appreciation.

4. Technological Advancements Impacting ETFs

Technological advancements in healthcare are driving the growth and evolution of the ETFs in this sector.

Developments in medical treatments, devices, and pharmaceuticals can impact the performance of the companies within these ETFs, providing new opportunities for potential gains.

One significant technological development is the rise of quantum computing, which promises to revolutionize multiple industries, including healthcare.

Quantum computing advancements can lead to increased computational speeds up to 100,000,000 times, enabling more efficient drug discovery, genomics research, and medical diagnostics.

Google and NASA’s partnership has led to the establishment of the Quantum Artificial Intelligence Lab (QuAIL), focused on developing quantum algorithms to enhance data processing capabilities.

The use of D-Wave quantum computers with quantum annealing processors and quantum tunneling can aid in solving complex problems in healthcare as well as error-correcting quantum encoding.

As technological advancements continue to reshape the healthcare industry, ETFs within the sector will also evolve, offering new opportunities for investors.

By investing in healthcare ETFs, investors can tap into this growing sector and take advantage of the potential growth driven by these advancements.

5. Comparing Performance and Fees

When evaluating the best healthcare ETFs in Canada, it’s crucial to compare both performance and fees.

Performance can be assessed by looking at historical annual compounded total returns, which include changes in unit value and reinvestment of distributions. It’s essential to remember that past performance may not be repeated, and ETF values change frequently.

Fees are a critical aspect of evaluating healthcare ETFs, as higher fees can lead to reduced returns over time. Some critical fees to consider include the management fee and the management expense ratio (MER).

The management fee covers the cost of managing the fund, while the MER includes all fund expenses, such as administrative fees and other operating costs.

For example, TD Global Healthcare Leaders Index ETF (TDOC) has a relatively low MER of 0.38% and a 12m trailing yield of 1.45%.

With assets under management of $31M, TDOC offers investors cost-efficiency while providing access to a diversified healthcare portfolio.

6. Sustainable Investment Opportunities with Healthcare ETFs

According to TradingEconomics some Canadian stocks dropped more than 80% this year. This can be a buying opportunity.

Investors seeking sustainable investment opportunities can find them within the healthcare sector through ETFs that incorporate environmental, social, and governance (ESG) factors.

Some healthcare ETFs use ESG-focused investment strategies, while others may invest in underlying funds with ESG criteria.

For example, the iShares Global Healthcare Index ETF (XHC) provides information on sustainability characteristics, such as MSCI ESG metrics and scores.

The Implied Temperature Rise (ITR) metric is also available for investors to assess alignment with Paris Agreement temperature goals.

It’s important to note that the ITR metric is not an indication of fund performance or risk, and there are limitations and assumptions in its calculations.

Business Involvement metrics offer a comprehensive view of fund activities, covering areas like controversial weapons, nuclear weapons, thermal coal, civilian firearms, oil sands, and tobacco.

These metrics provide investors with a clearer understanding of the fund’s exposures and potential ESG risks.

Investing in sustainable healthcare ETFs can not only provide potential gains but also contribute to a healthier and more resilient global economy, making them an attractive option for investors with a focus on ESG factors.