Healthcare ETFs give Australian investors thematic exposure to the global healthcare sector — pharmaceuticals, medical devices, biotechnology, health insurance, and hospitals — through ASX-listed funds. Healthcare is considered a defensive sector: demand for healthcare is generally stable regardless of economic conditions. This article explains the main healthcare ETFs on the ASX.
Why Healthcare as a Sector?
Healthcare has several characteristics that investors find appealing:
- Defensive demand — people need medication, surgery, and care regardless of economic cycles
- Demographic tailwind — ageing populations in developed countries increase healthcare consumption
- Innovation — pharmaceutical, biotech, and medical device innovation creates long-term growth
- Diversification — low correlation with financial and materials sectors that dominate the ASX
Healthcare also carries specific risks:
- Regulatory risk — drug approvals, pricing regulation, and government policy significantly affect profitability
- Clinical trial risk (for individual biotech companies) — a failed drug trial can wipe out value
- Valuation risk — healthcare growth stocks often trade at high earnings multiples
Healthcare ETFs Available on the ASX
| ETF | Provider | Coverage | Holdings | MER |
|---|---|---|---|---|
| IXJ | iShares | Global healthcare | ~100 | 0.46% |
| DRUG | BetaShares | Global healthcare | ~65 | 0.57% |
| HLTH | SPDR | Global healthcare | ~50 | 0.45% |
IXJ — iShares Global Healthcare ETF
IXJ tracks the S&P Global 1200 Healthcare Sector Index — a market-cap-weighted index of global healthcare companies.
- MER 0.46%
- ~100 holdings
- Top holdings: UnitedHealth Group, Eli Lilly, Johnson & Johnson, AbbVie, Novo Nordisk, Merck
- Quarterly distributions
- USD-denominated with currency exposure
DRUG — BetaShares Global Healthcare ETF (Currency Hedged)
DRUG tracks a currency-hedged global healthcare index, neutralising AUD/USD currency fluctuations.
- MER 0.57%
- ~65 holdings
- AUD-hedged — unit price reflects global healthcare performance in AUD terms, not raw USD
- Similar sector coverage to IXJ
Does VAS or VGS Include Healthcare?
Yes — healthcare is already present in broad market ETFs:
- VAS: CSL Limited (~5–6% of VAS) is Australia’s largest listed healthcare company. VAS has approximately 8–12% healthcare sector exposure overall.
- VGS: Approximately 11–13% healthcare (UnitedHealth, Eli Lilly, J&J, AbbVie, Novo Nordisk).
Holding a dedicated healthcare ETF adds to and concentrates your existing healthcare exposure beyond what the market dictates.
CSL — Australia’s Healthcare Giant
CSL Limited (CSL) — the plasma therapy and vaccine company — is Australia’s largest healthcare company and one of the 10 largest ASX stocks. Investors holding VAS or A200 already have significant CSL exposure. CSL itself represents a large single-company bet on Australian healthcare. Healthcare ETFs like IXJ and DRUG add global pharmaceutical and biotech exposure alongside CSL.
Healthcare ETF Performance
Healthcare is considered a “growth-defensive” sector — it tends to outperform during market downturns (defensive characteristics) and has strong long-term growth drivers. The sector performed strongly during COVID (vaccines, diagnostics) and has benefited from GLP-1 drug (weight loss) excitement in 2023–2024.
Past performance is not a reliable indicator of future performance.
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Frequently Asked Questions
Is the global healthcare sector suitable for long-term investors? Healthcare is commonly included in long-term investment portfolios — its defensive demand characteristics, ageing population tailwinds, and innovation-driven growth are well-understood investment themes. However, individual healthcare companies carry regulatory and clinical trial risk that broad market ETFs do not. A dedicated healthcare ETF provides diversification within the sector, reducing single-company risk compared to buying individual pharmaceutical stocks.
Should I choose IXJ (unhedged) or DRUG (hedged)? IXJ (unhedged, 0.46% MER) is cheaper than DRUG (hedged, 0.57%). The currency choice mirrors the general hedged/unhedged ETF decision: IXJ gives you healthcare returns plus AUD/USD currency exposure; DRUG gives you healthcare returns only. For long-term investors who are comfortable with currency fluctuations, IXJ’s lower MER is attractive. DRUG suits investors who specifically want to remove currency risk from their healthcare exposure.
Does CSL count as healthcare exposure? Yes. CSL is one of the world’s largest plasma therapy companies and one of Australia’s most internationally diversified businesses. Investors holding VAS or A200 already have CSL exposure (~5–6% of the fund). CSL is included in IXJ and DRUG. Adding a healthcare ETF alongside VAS would increase CSL concentration significantly.
This article provides general financial information only. Thematic ETFs carry higher concentration risk than broad market ETFs. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.