Looking for ways to invest in innovation amid significant tech concentration risk? Investing in health technology could provide some smart solutions. Health tech firms benefit from huge advancements in computing, like artificial intelligence, to improve their business outlooks. That can position those firms for continued growth as artificial intelligence competition and conditions tighten. With that in mind, investors may want to look to a health tech ETF like FDHT, which has outperformed the S&P 500 YTD.
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The Fidelity Digital Health ETF (FDHT ) charges a 40 basis point fee. The health tech ETF tracks a market-cap-weighted index of global digital health firms. Specifically, stocks of companies are first selected based on market share and revenues tied to one or a combination of the following designated business activity categories, subject to thematic quality screens: digital healthcare products & services and connected medical devices. That includes areas like healthcare records management, surgical robotics, connected medical devices, telemedicine, and more. Further, the index ranks stocks based on a thematic score.
The Health Tech ETF Approach in FDHT
That has helped FDHT get off to a strong start in 2025. According to YCharts data, FDHT has returned 8.76% on a YTD basis as of February 10. That’s better than the S&P 500 Total Return index’s 2.55% return, per YCharts. The ETF’s price of $21.59 as of February 10 sat above both its 50- and 200-day simple moving averages. That may indicate a healthy degree of momentum for the ETF itself.
What kind of outlook might the health tech ETF have for the rest of the year, and what role can it play for investors? Rising uncertainty and concern around concentration risk could drive investors to diversify into other tech areas. What’s more, with rate cuts less likely in the early months of this year, closer ties to more “defensive,” stable areas like healthcare could help portfolios. Healthcare technology provides a helpful balance therein. As AI pushes technology forward, investing in the knock-on benefits, rather than directly in AI companies themselves, could help a portfolio overall.
For more news, information, and analysis, visit the ETF Investing Channel.
Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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