Investing in healthcare stocks

The healthcare sector is large and complex. Australian investors must be wary of governmental regulations and political shifts before investing in healthcare stocks.

What are healthcare stocks?

Healthcare stocks belong to the healthcare sector of the stock market — one of 11 sectors defined by the Global Industry Classification Standard. Companies within the healthcare sector provide medical services, including insurance, medical equipment and pharmaceuticals.

The healthcare sector is large, with healthcare-related spending accounting for approximately 10% of Australia's GDP in 2018. The healthcare sector is also complex, given government and professional licensing regulations, research costs and the rapid evolution of the medical field.

What subcategories does it include?

The healthcare sector can be further divided into the following major industries:

• Healthcare facilities. These include hospitals, clinics, laboratories, mental health facilities and nursing homes.
• Health insurance. Companies responsible for providing and underwriting health insurance policies also belong to the healthcare sector.
• Medical equipment. Medical equipment providers design and manufacture equipment used across the sector, from CT scanners to surgical gloves.
• Pharmaceuticals. Biotech firms and major pharmaceutical firms work to research, develop and distribute generic and name-brand drugs.

How to invest in the healthcare sector

There are two ways to invest in the healthcare sector in Australia: individual stocks or exchange-traded funds (ETFs). Individual stocks offer targeted investment opportunities but have limited market exposure. Sector-tracking ETFs are more diverse and less risky than individual stocks but are accompanied by expense ratios.

Before you can invest, you’ll need a brokerage account in Australia. Here’s how the investment process works:

1. Pick a platform. Online brokerages in Australia are plentiful, so conduct your own research to find the platform best suited to your investment goals.
2. Open an account. If you opt for a web-based brokerage account, you can complete the application process online.
3. Fund your account. Before you can purchase securities, fund your account with an external transfer.
4. Select your securities. Search for stocks and ETFs by sector using your platform’s research tools.
5. Place an order. Once you’ve found a security you’d like to purchase, indicate how many you’d like to buy and submit your order.
6. Monitor your investments. Log in to your brokerage account to track your investments.

ASX healthcare stocks

There are many health stocks listed on the Australian Securities Exchange (ASX) including CSL, Fisher and Paykel, Sonic Healthcare and Ramsay Health Care.

The best-performing ASX health stocks so far in 2024 are LTR Pharma Limited (ASX: LTP), which is up 434.78%, and Mesoblast Limited (ASX: MSB), which is up 354.84%.¹

What ETFs track the healthcare sector?

Popular ETFs in the healthcare sector include:

• ETFS S&P Biotech (CURE)
• iShares Global Healthcare (IXJ)
• WCM Quality Global Growth Fund (WCMQ)
• Vaneck Vectors Global Healthcare Leaders (HLTH)

How is the healthcare sector performing?

The graph below tracks the Health Care Select Sector SPDR Fund (XLV). Tracking ETF performance is one way to measure how the sector as a whole is doing.

Why invest in healthcare stocks?

Healthcare is a human necessity. This means the demand for healthcare services typically remains unchanged, regardless of how other industries rise and fall. Investing in well-established healthcare stocks can provide a cushion of security in an aggressive growth portfolio

Healthcare stocks also offer Australian investors the opportunity to fund medical research. As the field continues to expand, investors can support research efforts seeking to cure disease.

What unique risks does the healthcare sector face?

The medical field is complicated, and if you don’t understand what a company does or how it operates, you may want to think twice before investing.

Government legislation is another major consideration for healthcare investors. Sweeping shifts in policy — the Affordable Care Act in the United States, for example — have the power to trigger significant volatility in this sector. And global drug approval authorities have the power to make or break fledgling pharmaceutical companies. If you choose to invest in this sector, keep an eye on political shifts and regulatory changes.

Compare stock trading platforms

To purchase stocks or ETFs, you'll need a brokerage account in Australia. Use this table to compare your options and find the right fit.

6 of 6 results

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Finder Score	AU Trading Fee	US Trading Fee	Asset Class
Promoted Finder Score 9.6 Excellent Moomoo Share Trading Finder Award	Finder Score 9.6 Excellent	$3.00	US$0.99	ASX shares, Global shares, Options trading, US shares, ETFs	Welcome offer: Enjoy 30 days of $0 brokerage on AU and US stocks and receive up to 38 free shares when you open and fund a new account. Expires on 31 May 2026. T&Cs apply.	Trade major markets with built-in social trading tools.	$100 REWARD Go to siteView details Compare product selection Compare	loading
Promoted Finder Score 8.7 Great eToro	Finder Score 8.7 Great	US$2.00	US$2.00	ASX shares, Global shares, US shares, ETFs, Cryptocurrencies	CFD service. Capital at risk. Trade a range of assets from a single account with access to social trading features.	$150 REWARD Go to siteView details Compare product selection Compare	loading
Promoted Finder Score 9.8 Excellent Webull Finder Award	Finder Score 9.8 Excellent	$1.00	$0.00	ASX shares, Global shares, Options trading, US shares, ETFs, Cryptocurrencies	Welcome offer: Receive 5 US fractional shares by depositing or transferring AUD$500 or more into a new account. 2% cashback is also available to those who provide additional funding and execute a trade in the US market. Expires on 30 June 2026. T&Cs apply.	Invest in over 15,000 shares, options, and $0 Brokerage on all U.S. and Australian Chess-Sponsored ETFs.	Go to siteView details Compare product selection Compare	loading
Finder Score 9.3 Excellent Tiger Brokers Finder Award	Finder Score 9.3 Excellent	$3.00	US$2.00	ASX shares, Global shares, Options trading, US shares, ETFs	Deposit any amount and receive $20 to trade in Tiger Brokers. Plus 4x zero brokerage trades and no FX fees on the first $2,000 you exchange every month. T&Cs apply.	Trade US, Asian and CHESS-sponsored ASX stocks, China A-class shares, plus US and Hong Kong options and ETFs.	$120 REWARD Go to siteView details Compare product selection Compare	loading
Finder Score 9.9 Excellent CMC Invest Finder Award	Finder Score 9.9 Excellent	$0.00	$0.00	ASX shares, Global shares, Options trading, US shares, mFunds, ETFs, Cryptocurrencies	Trade 45,000+ listed securities across the local markets and 15 major global exchanges.	Go to siteView details Compare product selection Compare	loading
Finder Score 9.3 Excellent IG Share Trading Finder Award	Finder Score 9.3 Excellent	$0.00	US$0.00	ASX shares, Global shares, US shares, UK shares, ETFs	Go to siteView details Compare product selection Compare	loading

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Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Bottom line

The healthcare sector offers the opportunity for profit but carries its own unique set of risks. Whether or not this sector belongs in your portfolio depends on your risk tolerance and investment goals. Explore your brokerage account options across multiple trading platforms for the account best suited to your needs.

Frequently asked questions

• How do I follow the healthcare sector?

  A number of third-party research providers, including Bloomberg and Yahoo Finance, offer sector analytics to help investors stay on top of industry trends and price fluctuations.

• How do I find healthcare stocks?

  Most trading platforms offer access to a stock screener — a research tool that enables you to filter stocks by sector.

Written by

Shannon Terrell

Writer

Shannon Terrell is a writer for Finder who studied communications and English literature at the University of Toronto. On any given day, you can find her researching everything from equine financing and business loans to student debt refinancing and how to start a trust. She loves hot coffee, the smell of fresh books and discovering new ways to save her pennies. See full bio