In an uncertain marketplace, where are investors to go? Sector funds could provide one intriguing set of tools to consider. Especially when empowering those strategies with active investing, investors can use them as building blocks to target specific market segments. That’s where a strategy like the active healthcare ETF TMED, for example, could play an important role.
Key Takeaways:
- Active healthcare ETF TMED has significantly outperformed its benchmark index of late.
- Amid global volatility and red hot tech stocks, healthcare stocks diversification could appeal.
- T. Rowe Price’s fundamental research-driven, bottom-up approach could make TMED a standout.
The T. Rowe Price Health Care ETF (TMED ), charges a competitive 44 basis point fee to actively invest in healthcare stocks. The strategy, launched in 2025, sees its managers lean on fundamental research to select its holdings. Applying that bottom-up approach, the active healthcare ETF’s managers invests in U.S. and ex-U.S. healthcare names including biotechnology, pharmaceuticals, products and device providers, and healthcare service companies.
Together, that has helped the ETF return 20.56% over the last year, according to YCharts data. The fund’s benchmark, the S&P Health Care Select Sector Index, has trailed the ETF’s performance in that time, with just 11.1% in the same time frame. The strategy’s holdings include big names like Eli Lilly (LLY), which has done well over the last one-year period, despite a dip to start 2026.
What role, then, might the active healthcare ETF have to play for the rest of the year? Healthcare stocks offer some defensive benefits to portfolios, which could help as global volatility looms. Consequences from the U.S.-Israel-Iran war, with energy, fertilizer, and other key Middle Eastern export costs could drag global growth this year. Healthcare stocks can help portfolios find performance even as those headwinds grow.
See more: Analysis: Active ETFs Lapped Passive ETF Inflows in March
That could prove crucial for investors especially as tech equities face red hot valuations, and SaaS companies, for example, face serious challenges. While AI may or may not be a bubble, concentration risk remains a notable threat for some tech-heavy portfolios. For those looking at a more defensive play with active ETF flexibility and upside, TMED can intrigue.
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