HLTH vs IHI: Which Is the Better Pick in 2026?

Overview

HLTH and IHI are both healthcare-focused ETFs, but they pursue different investment angles. HLTH is an actively managed fund that targets companies applying artificial intelligence across drug discovery, diagnostics, imaging, devices, and healthcare IT. IHI is a passively managed fund tracking U.S. medical device manufacturers. The key distinction: HLTH bets on AI-driven innovation across the broader healthcare stack, while IHI focuses narrowly on the medical devices subsector.

How they differ

HLTH's active AI-healthcare strategy contrasts sharply with IHI's passive exposure to a defined device-maker index. That's the structural difference. On risk, HLTH carries a beta of 1.086 versus IHI's 0.82, meaning HLTH amplifies market swings — fitting for a concentrated thematic play on an emerging technology. HLTH charges 0.75% in expenses against IHI's 0.40%, a meaningful gap when compounded over years. IHI is vastly larger at $3.38B in assets, versus HLTH's $2.30M, and has been running since 2006; HLTH launched in July 2026 and is still establishing its track record. IHI pays a quarterly distribution yielding 0.55%, while HLTH reports no distribution rate in the data.

Who each is best for

HLTH: Fits investors who believe AI will meaningfully reshape healthcare delivery and diagnostics, have a higher risk tolerance, and are willing to pay for active management's stock-picking in an emerging subsector.

IHI: Fits investors seeking stable, lower-volatility exposure to a mature, concrete business category — medical device makers — without picking individual companies or paying for active management.

Key risks to know

• HLTH's nascent track record: With an inception date of July 2026, the fund has minimal performance history to evaluate. Investor base and asset stability are unproven, which can amplify redemption risk if inflows slow.
• Concentration and thematic risk in HLTH: An actively managed AI-healthcare portfolio is inherently concentrated; overlapping holdings in early-stage or mid-cap AI firms could mean correlated drawdowns if the sector underperforms or AI hype cools.
• Higher beta in HLTH: At 1.086, HLTH will likely fall harder in downturns and rise faster in rallies than the broader market, a risk for investors unprepared for wider swings.
• IHI's mature-sector headwind: Medical devices is a slower-growth segment; IHI's lower volatility (0.82 beta) comes with exposure to companies facing slower revenue expansion and regulatory pressures.
• Expense ratio compounding: HLTH's 0.75% fee is nearly double IHI's 0.40%; over 20 years, that gap compounds meaningfully and must be offset by outperformance from active management.

Bottom line

If you're bullish on AI transforming healthcare and accept higher volatility, HLTH offers thematic exposure through active stock-picking; if you want lower-cost, lower-volatility access to an established device-maker category with a longer operating history, IHI's passive approach and smaller fee footprint may suit you better. HLTH's very early stage and tiny asset base mean liquidity and fund survival carry real execution risk worth monitoring, and past performance doesn't predict future results.