Healthcare exchange-traded funds (ETFs) invest in a basket of stocks of companies that provide medical services, develop medical equipment or drugs, offer medical insurance, or facilitate the provision of healthcare to patients. Some notable companies in the healthcare sector include UnitedHealth Group Inc. (UNH), CVS Health Corp. (CVS), and Cigna Corp. (CI). Because the majority of healthcare services and products are necessities as opposed to luxuries, the healthcare industry is considered non-cyclical, which makes healthcare ETFs a strong defensive position in any portfolio.

The healthcare ETF universe is comprised of about 42 distinct ETFs, excluding leveraged and inverse ETFs. The best-performing healthcare ETF for Q1 2020, based on performance over the past year, is the Virtue LifeSci Biotech Clinical Trials ETF (BBC). We examine the top 3 best healthcare ETFs below. All numbers in this story are as of February 9, 2020.

Virtus LifeSci Biotech Clinical Trials ETF (BBC)

  • Performance over 1-Year: 48.8%
  • Expense Ratio: 0.79%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 29,263
  • Assets Under Management: $37.4 million
  • Inception Date: December 16, 2014
  • Issuing Company: Virtus

BBC is a multi-cap ETF that invests in U.S. small-, mid-, and large-cap equities in the healthcare sector. The fund follows a strategy focused on growth stocks. As of February 9, 2020, the ETF's top three holdings include Axsome Therapeutics Inc. (AXSM), a biopharmaceutical company, CEL-SCI Corp. (CVM), a biotechnology company, and Alector Inc. (ALEC), also a biotechnology company.

ALPS Medical Breakthroughs ETF (SBIO)

  • Performance over 1-Year: 30.7%
  • Expense Ratio: 0.50%
  • Annual Dividend Yield: 0.04%
  • 3-Month Average Daily Volume: 56,870
  • Assets Under Management: $224.7 million
  • Inception Date: December 30, 2014
  • Issuing Company: ALPS

SBIO is a small-cap ETF that focuses on U.S. healthcare stocks and follows a growth strategy. As of February 9, 2020, the fund's top three holdings include Acceleron Pharma Inc. (XLRN), a biopharmaceutical company, bluebird bio Inc. (BLUE), a biotechnology company, and United Therapeutics Corp. (UTHR), also a biotechnology company.

KraneShares MSCI All China Health Care Index ETF (KURE)

  • Performance over 1-Year: 29.3%
  • Expense Ratio: 0.65%
  • Annual Dividend Yield: 0.23%
  • 3-Month Average Daily Volume: 13,919
  • Assets Under Management: $25.2 million
  • Inception Date: February 01, 2018
  • Issuing Company: KraneShares

KURE is a large-cap ETF that invests in equities belonging to China's healthcare sector. The fund follows a blended strategy, investing in both value and growth stocks. As of February 9, 2020, the ETF's top three holdings include Jiangsu Hengrui Medicine Co. Ltd. (600276), CSPC Pharmaceutical Group Ltd. (1093), and Sino Biopharmaceutical Ltd. (1177), all three of which are China-based pharmaceutical companies.