The most noteworthy medical device funds to watch in 2025: From a $5.1B giant to niche segment players

If you want to position yourself in the healthcare sector but avoid the risk of betting on a single company, medical device ETFs (Exchange-Traded Funds) offer an undervalued option. Instead of directly purchasing individual stocks, it’s better to diversify risk through carefully selected medical device ETFs — which is why best medical device etf is becoming a common focus for both institutions and retail investors.

Why are ETFs particularly suitable for medical device investments?

The medical device industry itself is quite volatile. A company’s clinical trial failure or FDA approval setback can cause its stock price to plummet. But if you hold a medical device ETF, this single-point risk is diluted across the entire fund pool. In other words, you can benefit from industry growth dividends without risking everything due to bad news from one company.

Another advantage of ETFs is convenience: with just one fund ticker, you can hold shares of 50-66 companies simultaneously, saving you the trouble of researching and selecting stocks yourself.

IHI vs XHE: The showdown between the two largest medical device ETFs

According to the latest data, there are only three major medical device ETFs on the market, with two clearly leading in size.

iShares US Medical Devices ETF (IHI) — The market leader

Assets Under Management: $5.1 billion
Number of Holdings: 50 companies
Inception: 2006

IHI is the absolute leader in this field, with assets more than 20 times that of the second place. Its core holdings include:

Abbott Laboratories (ABT) — This company’s medical devices mainly focus on vascular diseases, diabetes management, and vision care, making it a heavyweight in IHI.

Intuitive Surgical (ISRG) — Known for the da Vinci surgical robot, improving clinical outcomes through minimally invasive surgery systems. Its product line includes the Ion endoluminal system, representing cutting-edge medical device technology.

Boston Scientific (BSX) — Its product portfolio covers gastroenterology, cardiac and vascular surgery, neurology, orthopedics, and urology, among other segments.

IHI is suitable for investors seeking stable, large-cap blue-chip medical device exposure.

SPDR S&P Health Care Equipment ETF (XHE) — Niche segment explorer

Assets Under Management: $208.99 million
Number of Holdings: 66 companies
Inception: 2011

Although XHE is smaller in size, it tracks more companies (66 vs 50), meaning its stock selection strategy is more diversified and better at capturing opportunities in small- and mid-cap medical device companies.

Inari Medical (NARI) — Based in California, this company developed the first FDA 510(k) cleared mechanical thrombectomy system for treating pulmonary embolism. This is a relatively emerging but rapidly growing niche market.

AtriCure (ATRC) — Focused on atrial fibrillation treatment, it is the first medical device manufacturer approved by the FDA for persistent atrial fibrillation therapy.

iRhythm Technologies (IRTC) — Combines wearable biosensors, cloud data analysis, and proprietary algorithms to generate clinically actionable medical information. It exemplifies the trend of integrating medical devices with digital health.

XHE is more suitable for investors looking to explore high-growth potential and willing to accept more volatility.

Which one should you choose?

Choose IHI if you:

• Want to invest in core blue-chip medical device companies
• Prefer liquid, large-scale funds
• Have a relatively lower risk tolerance

Choose XHE if you:

• Are optimistic about emerging segments in medical devices
• Want to capture growth opportunities in small- and mid-cap companies
• Can tolerate higher volatility

Both best medical device etf are legitimate investment tools; the difference lies in whether you prefer a “big and stable” or “small and refined” strategy.

Note: This article is for informational purposes only and does not constitute investment advice. Please do your due diligence based on your own risk tolerance before investing.