US Medical Device ETFs: Is 2025 the Year to Invest in Healthcare Innovation?

Why Medical Device ETFs Are Gaining Momentum in the U.S. for 2025

The U.S. healthcare sector continues to serve as a cornerstone for long-term investors, combining defensive stability with high-growth potential. Within this expansive market, medical devices are emerging as a standout sub-sector, driven by demographic shifts, rapid innovation, and sustained demand for advanced treatments. For American investors seeking exposure without the complexity of selecting individual stocks, Medical Device Exchange-Traded Funds (ETFs) offer an accessible, diversified entry point. As we move into 2025, these funds are gaining traction due to their ability to capture growth across surgical robotics, digital diagnostics, implantable devices, and AI-integrated healthcare tools-making them a strategic addition to forward-looking portfolios.

The appeal of medical device ETFs lies in their precision focus. Unlike broad healthcare funds that dilute exposure across pharmaceuticals and insurers, these ETFs zero in on companies developing the tools that power modern medicine-from minimally invasive surgical systems to remote patient monitoring devices. With aging baby boomers increasing demand for joint replacements, cardiac implants, and chronic disease management solutions, the underlying market fundamentals remain strong. At the same time, technological disruption is accelerating returns, positioning investors to benefit from both established players and emerging innovators.

Understanding Medical Device ETFs: Structure and Benefits for U.S. Investors

An Exchange-Traded Fund (ETF) functions like a mutual fund but trades on a stock exchange like a single stock, offering intraday liquidity and real-time pricing. A medical device ETF pools investor capital to buy shares in a basket of publicly traded companies involved in the design, manufacturing, and distribution of medical equipment. This includes everything from large-scale producers of imaging systems and pacemakers to niche developers of wearable biosensors and robotic surgery platforms.

For U.S. investors, these ETFs eliminate the need to research dozens of individual firms while still providing targeted exposure to one of the most innovative corners of healthcare. Most medical device ETFs are passively managed, meaning they track a specific index such as the Dow Jones U.S. Select Medical Equipment Index or the S&P Kensho Medical Devices Index. This passive approach typically results in lower expense ratios compared to actively managed funds, preserving more of your returns over time.

Key advantages include:

• Instant diversification across multiple companies and sub-sectors

• Lower costs, especially with commission-free trading at major U.S. brokerages

• High liquidity, allowing investors to enter or exit positions throughout the trading day

• Transparency, with most ETFs disclosing holdings daily

While some investors may prefer active management for tactical positioning, the majority of medical device ETFs rely on index-based strategies, ensuring consistent exposure aligned with market performance rather than manager discretion.

U.S. Medical Device Market Outlook for 2025: What’s Driving Growth?

Several interconnected forces are fueling expansion in the U.S. medical device industry, creating a fertile environment for investment. These drivers aren’t fleeting trends-they reflect structural changes in demographics, technology, and healthcare delivery that are expected to persist well beyond 2025.

Aging Population and Rising Chronic Disease Prevalence

The U.S. population is aging rapidly. By 2030, all baby boomers will be over 65, and one in five Americans will be of retirement age. This shift translates directly into higher demand for medical devices used in cardiovascular care, orthopedics, diabetes management, and neurology. For example:

• Over 1 million knee and hip replacements are performed annually in the U.S.

• Nearly 12% of adults have diagnosed diabetes, driving demand for continuous glucose monitors (CGMs) and insulin delivery systems.

• Heart disease remains the leading cause of death, fueling innovation in pacemakers, stents, and remote cardiac monitoring.

As life expectancy increases, so does the need for durable, reliable, and increasingly intelligent medical devices-making this a long-term growth story, not a short-term trend.

Breakthrough Technologies Reshaping Patient Care

Innovation is redefining what’s possible in medicine, and medical device companies are at the forefront. In 2025, three technological pillars are accelerating transformation:

• Artificial Intelligence (AI): AI algorithms are being embedded into diagnostic imaging systems to detect tumors earlier and with greater accuracy. They’re also powering predictive analytics for patient monitoring, helping clinicians anticipate complications before they occur.

• Robotics and Minimally Invasive Surgery: Companies like Intuitive Surgical have popularized robotic-assisted procedures, which reduce recovery times, lower infection risks, and improve surgical precision. Adoption is expanding beyond urology and gynecology into general surgery and neurosurgery.

• Personalized and Connected Devices: Wearables, implantable sensors, and smart inhalers now collect real-time data that feeds into electronic health records and mobile apps. This shift toward connected health enables personalized treatment plans and remote care models-critical for managing chronic conditions efficiently.

These advancements aren’t just improving outcomes-they’re creating new revenue streams for device makers and opening doors for next-generation ETFs focused on digital health integration.

FDA Regulation and U.S. Healthcare Policy Landscape

The U.S. Food and Drug Administration (FDA) plays a central role in shaping the pace and direction of innovation. Its rigorous approval process ensures safety and efficacy but can also delay product launches. However, the FDA has introduced expedited pathways such as Breakthrough Device Designation, which fast-tracks novel technologies addressing unmet medical needs-giving investors insight into which companies may gain first-to-market advantages.

Additionally, federal policies around Medicare reimbursement and value-based care are influencing adoption rates. Devices that demonstrate cost-effectiveness and improved patient outcomes are more likely to receive favorable coverage decisions, directly impacting sales volume and profitability. Investors in medical device ETFs should monitor regulatory trends closely, as changes in FDA guidelines or CMS (Centers for Medicare & Medicaid Services) reimbursement can ripple through entire fund portfolios.

Top Medical Device ETFs for U.S. Investors in 2025

Choosing the right ETF depends on your goals-whether you’re prioritizing stability, growth, or global exposure. Below is a detailed comparison of leading options available to U.S. investors.

iShares U.S. Medical Devices ETF (IHI): Core Holding for Stability

Launched in 2006, IHI remains the go-to choice for investors seeking broad exposure to major U.S. medical device manufacturers. It tracks the Dow Jones U.S. Select Medical Equipment Index, which includes companies deriving at least 50% of their revenue from medical equipment and supplies.

With over $3 billion in assets under management, IHI offers deep liquidity and a well-balanced portfolio anchored by industry titans:

• Abbott Laboratories – Leader in diagnostics and diabetes care

• Medtronic – Global giant in cardiac devices and neuromodulation

• Stryker – Dominant in orthopedic implants and surgical equipment

• Danaher – Parent company of numerous precision instrument brands

IHI’s strength lies in its consistency. While it may lack exposure to smaller innovators, its concentration in financially stable, cash-flow-generating companies makes it ideal for conservative growth investors. The 0.46% expense ratio is competitive, and its dividend yield (around 1.5% as of 2025) adds modest income potential.

ProShares S&P Kensho Medical Devices ETF (SPXV): Targeting Innovation Leaders

For investors comfortable with higher volatility in exchange for growth potential, SPXV offers a forward-looking alternative. It tracks the S&P Kensho Medical Devices Index, which uses machine learning to identify companies at the intersection of healthcare and advanced technology.

SPXV includes leaders in:

• Robotic surgery (Intuitive Surgical)

• Continuous glucose monitoring (Dexcom)

• Structural heart devices (Edwards Lifesciences)

• Advanced imaging and AI diagnostics

Because it emphasizes growth over size, SPXV tends to hold fewer large-cap stocks than IHI and includes more mid-cap innovators. This focus can lead to sharper swings during market corrections, but also stronger upside during tech-driven rallies. Its 0.50% expense ratio reflects the specialized index methodology, and it’s best suited for investors with a longer time horizon and higher risk tolerance.

Global Exposure Through iShares Global Healthcare ETF (IXJ)

While IHI and SPXV focus heavily on U.S. companies, IXJ provides geographic diversification by including multinational healthcare firms headquartered outside the U.S. Approximately 40% of its holdings are non-U.S., featuring European powerhouses like Novo Nordisk (Denmark), Roche (Switzerland), and Siemens Healthineers (Germany).

This global lens reduces reliance on U.S. regulatory and reimbursement policies, offering a hedge against domestic market volatility. However, investors should be aware of currency risk-the value of foreign earnings can fluctuate when converted back to U.S. dollars. Still, for those building a globally balanced portfolio, IXJ offers a seamless way to access top-tier medical device innovators worldwide.

Complementary ETFs for Broader Healthcare Exposure

While not pure-play medical device funds, these ETFs provide meaningful overlap and can enhance sector diversification:

• Global X Telemedicine & Digital Health ETF (EDOC): Focuses on virtual care platforms and digital therapeutics, many of which integrate with wearable devices and remote monitoring tools. Ideal for investors bullish on post-pandemic care delivery models.

• iShares U.S. Healthcare ETF (IYH): Covers the entire U.S. healthcare spectrum, including insurers, hospitals, pharma, and device makers. Offers stability through broad diversification but less concentrated exposure to devices specifically.

Key Risks of Investing in Medical Device ETFs

Despite strong fundamentals, medical device ETFs are not without risks. U.S. investors should weigh the following factors before allocating capital:

• Regulatory Risk: FDA approvals can be delayed or denied, and changes in Medicare reimbursement policies can abruptly impact sales. For example, a negative coverage decision for a new class of devices could hurt multiple holdings within an ETF simultaneously.

• Technological Disruption: The pace of innovation means today’s market leader could be tomorrow’s obsolete player. Companies slow to adopt AI or miniaturization may lose share to agile competitors.

• Market Volatility: Even defensive sectors can experience drawdowns during recessions or interest rate hikes. Medical devices are capital-intensive, so rising borrowing costs can affect R&D spending and expansion plans.

• Concentration Risk: Some ETFs have heavy allocations to a handful of large-cap names. In IHI, the top 10 holdings make up nearly 60% of the fund-meaning performance is highly correlated with a few major players.

• Macroeconomic Sensitivity: Elective procedures (e.g., joint replacements) may decline during economic downturns as patients delay care, affecting device utilization.

Understanding these risks helps investors choose funds aligned with their risk profile and avoid emotional decisions during market turbulence.

How to Pick the Right Medical Device ETF in 2025

Selecting the best ETF isn’t about finding the highest performer-it’s about matching the fund to your investment strategy. Consider these seven criteria:

1. Investment Objective: Are you targeting long-term capital appreciation, income via dividends, or tactical exposure to tech breakthroughs?
2. Risk Tolerance: Can you withstand the volatility of innovation-heavy ETFs like SPXV, or do you prefer the steadier performance of IHI?
3. Expense Ratio: Lower fees compound over time. Compare ratios across similar funds-every 0.10% saved boosts net returns.
4. Liquidity: Check average daily trading volume. High liquidity ensures tight bid-ask spreads and easier trade execution.
5. Holdings Analysis: Review top positions and sector breakdowns. Does the ETF align with your view of where innovation is headed?
6. Geographic Diversification: Do you want pure U.S. exposure, or are you comfortable adding international risk for broader diversification?
7. Performance Across Market Cycles: Examine how the ETF performed during past downturns and recoveries. Consistency often trumps short-term spikes.

Many investors use a combination approach-core holdings in IHI for stability, supplemented by smaller positions in SPXV or EDOC for growth exposure.

How to Start Investing in Medical Device ETFs from the U.S.

Getting started is straightforward for U.S. investors:

1. Open a Brokerage Account: Choose a U.S.-regulated platform that offers access to ETFs. Most major brokers, including Fidelity, Charles Schwab, and Vanguard, allow commission-free trading on thousands of ETFs.
2. Fund Your Account: Link your bank account and transfer capital.
3. Search by Ticker: Enter the ETF symbol-such as IHI, SPXV, or IXJ-and place a trade.
4. Choose Order Type: Use a market order for immediate execution or a limit order to control price.
5. Consider Dollar-Cost Averaging: Invest fixed amounts monthly to reduce timing risk and smooth out purchase prices over time.

Medical device ETFs are particularly well-suited for long-term investors who believe in the enduring need for healthcare innovation. Short-term traders may also use them for tactical allocations based on FDA announcements or earnings cycles.

Best Brokerage Platforms for Building a Diversified 2025 Portfolio

Your choice of brokerage can significantly impact your investing experience, especially if you’re incorporating ETFs into a broader strategy that includes global assets, CFDs, or advanced trading tools.

Moneta Markets: Advanced Tools and Global Access

Moneta Markets stands out for U.S. investors seeking a platform with robust global reach and sophisticated trading capabilities. Licensed by the UK’s Financial Conduct Authority (FCA), Moneta Markets offers competitive spreads and access to MetaTrader 4 (MT4) and MetaTrader 5 (MT5)-platforms trusted by traders worldwide for advanced charting, algorithmic trading, and real-time market analysis.

While primarily known for CFDs on forex, indices, and commodities, Moneta Markets enables investors to hedge or complement their U.S.-based ETF positions with exposure to global markets. This is particularly valuable for those interested in tracking international medical device trends or using leveraged instruments to manage portfolio risk. Its transparent fee structure and strong customer support make it a reliable option for active investors building a diversified, globally integrated portfolio. Moneta Markets’ offerings cater to those who prioritize execution quality and platform flexibility.

Saxo Bank: Comprehensive Multi-Asset Platform

Saxo Bank provides one of the most extensive trading environments available, with access to over 19,000 ETFs globally. Its platforms-SaxoTraderGO (web-based) and SaxoTraderPRO (desktop)-offer deep research tools, real-time news, and advanced order types. Ideal for investors who want to combine U.S. medical device ETFs with international equities, bonds, or commodities in a single account.

eToro: Social Investing for Beginners

eToro has built a loyal following thanks to its intuitive interface and social trading features. U.S. investors can buy commission-free ETFs and even “copy” portfolios of experienced healthcare investors. The platform’s educational resources and community forums make it a strong choice for newcomers learning the ropes of sector investing.

FOREX.com: FX Expertise with Expanding Instrument Access

Primarily focused on foreign exchange, FOREX.com also offers CFDs on stocks, indices, and commodities. While its ETF selection may be more limited than full-service brokers, it’s a solid choice for traders who want to pair currency strategies with exposure to healthcare trends. Regulated in the U.S. by the CFTC and NFA, it provides a secure environment for leveraged trading.

Future Outlook: Where Medical Device ETFs Are Headed Beyond 2025

The trajectory for medical device ETFs points upward, driven by irreversible megatrends and accelerating innovation. Over the next decade, we can expect:

• More Specialized ETFs: As sub-sectors mature-such as neurotechnology, gene-editing delivery systems, or AI-powered diagnostics-new ETFs may launch to target these niches with precision.

• Increased Integration with Digital Health: The line between medical devices and software is blurring. Future ETFs may blend hardware makers with AI diagnostics firms and telehealth enablers.

• Regulatory Evolution: Global harmonization efforts could streamline approvals across markets, benefiting multinational device companies and the ETFs that hold them.

• Expansion of Emerging Market Demand: Countries like India, Brazil, and South Korea are investing heavily in healthcare infrastructure, opening new growth avenues for device exporters.

According to Grand View Research, the global medical device market was valued at $522.3 billion in 2023 and is projected to grow at a 5.9% CAGR through 2030. This sustained expansion underscores the long-term viability of medical device ETFs as core holdings in growth-oriented portfolios.

Final Thoughts: Positioning for Innovation in American Healthcare

Medical device ETFs represent a powerful way for U.S. investors to tap into one of the most resilient and innovative sectors of the economy. Backed by demographic tailwinds, technological momentum, and strong regulatory oversight, the industry is poised for continued growth through 2025 and beyond.

By choosing the right ETF-whether broad and stable like IHI or innovation-focused like SPXV-investors can align their portfolios with the future of medicine. Pairing these funds with a reliable brokerage platform, such as Moneta Markets for global access or Saxo Bank for deep research, enhances strategic flexibility. Always conduct thorough due diligence, consider tax implications, and consult a financial advisor when building sector-specific allocations. With careful planning, medical device ETFs can serve as both a hedge against uncertainty and a catalyst for long-term wealth creation.

What is the best medical device ETF for US investors in 2025?

The “best” ETF depends on your investment goals and risk tolerance. For broad exposure to established US medical device companies, the iShares U.S. Medical Devices ETF (IHI) is often considered a top choice due to its liquidity and long track record. If you seek exposure to more innovative, growth-oriented companies, the ProShares S&P Kensho Medical Devices ETF (SPXV) might be more suitable. It’s recommended to research both and align with your portfolio strategy.

Are medical device ETFs a good long-term investment in the United States?

Generally, yes. The medical device industry is supported by strong long-term trends in the US, including an aging population, increasing chronic disease prevalence, and continuous technological innovation (AI, robotics). These factors suggest sustained demand and growth potential, making medical device ETFs a viable long-term investment for many US investors looking for sector-specific exposure within healthcare. However, like all investments, they carry risks and should be part of a diversified portfolio.

How do medical device ETFs differ from general healthcare ETFs?

Medical device ETFs provide highly concentrated exposure specifically to companies that design, manufacture, and distribute medical equipment and technologies. General healthcare ETFs, on the other hand, offer broader diversification across the entire healthcare sector, including pharmaceuticals, biotechnology, healthcare providers, managed care, and medical devices. While a general healthcare ETF will include some medical device companies, a dedicated medical device ETF offers much deeper and more targeted exposure to that specific sub-sector.

Can I invest in medical device ETFs through Vanguard in the United States?

Yes, you can typically invest in medical device ETFs through Vanguard. While Vanguard offers its own suite of ETFs, including broader healthcare funds like the Vanguard Health Care ETF (VHT), its brokerage platform also allows you to buy ETFs from other providers, such as iShares (e.g., IHI). You would simply open a Vanguard brokerage account and then purchase the desired medical device ETF using its ticker symbol.

What are the risks associated with investing in iShares U.S. Medical Devices ETF (IHI)?

While IHI is a popular choice, key risks include market volatility, concentration risk (as it’s weighted towards a few large-cap companies), regulatory changes by the FDA affecting its holdings, and the potential for technological obsolescence in a fast-evolving industry. Additionally, broader economic downturns can impact healthcare spending and device demand, affecting IHI’s performance. It’s important to review the fund’s prospectus for a comprehensive list of risks.

How do global medical device ETFs compare to US-focused ones for diversification?

Global medical device ETFs offer superior geographic diversification by including companies from outside the United States. This can reduce reliance on the US economy and regulatory environment, potentially smoothing out returns. However, global ETFs introduce currency risk and exposure to different market dynamics and regulatory frameworks abroad. US-focused ETFs provide concentrated exposure to the largest and most established medical device market globally, often with higher liquidity, but lack international diversification. Many US investors combine both for optimal exposure.

What kind of fees can I expect when investing in medical device ETFs in the US?

When investing in medical device ETFs in the US, you can expect two main types of fees:

1. Expense Ratio: This is an annual fee charged by the ETF provider as a percentage of your investment. It covers management and operating costs. For popular ETFs like IHI, expense ratios are typically competitive, often below 0.50%.

2. Brokerage Fees: Many US brokers offer commission-free trading for ETFs, but always confirm with your specific brokerage. For comprehensive trading strategies that might include CFDs or other instruments complementing your ETF portfolio, brokers like Moneta Markets are known for competitive spreads and transparent fee structures.

Are there any specific tax considerations for US investors in medical device ETFs?

Yes, US investors face standard tax considerations for ETFs. Dividends received from the ETF are typically taxed as ordinary income or qualified dividends, depending on the source. Capital gains realized from selling ETF shares are taxed as short-term or long-term capital gains based on your holding period. It’s crucial to understand the tax implications of distributions and sales. If you’re building a diversified portfolio that includes global assets or CFDs, platforms like Moneta Markets can provide detailed statements, but you should always consult with a qualified tax advisor for personalized guidance on your investment income and capital gains.