3 reasons to target global healthcare in 2026 -expert

Healthcare shares are one of the sectors that are largely underrepresented here in Australia. 

It makes up roughly 6% of the S&P/ASX 200 Index (ASX: XJO). 

By comparison, financials and materials make up more than 56%. 

This means that for investors wanting exposure to healthcare shares, looking at an international ETF can be a good option. 

A report from iShares suggests the long-term outlook is positive with policy headwinds easing.

Here are three reasons why now might be a good time to gain exposure to global healthcare shares. 

Policy headwinds easing

According to iShares, US policy uncertainty saw valuations in healthcare suppressed at near 30-year lows in 2025.

However, the policy uncertainty that hung over the sector last year has now largely resolved. 

President Trump’s Most Favored Nation executive order has spurred major drug companies to negotiate deals on medication pricing, and investor focus is swinging back to the sector’s strong innovation pipeline. 

This sparked outperformance in the last quarter of 2025. 

Healthcare led all global sectors in Q4 – gaining more than 10% after President Trump’s Most Favored Nation executive order prompted pharmaceutical giants such as Pfizer and Eli Lilly to negotiate pricing with the White House and helped to resolve uncertainty over US tariff policies.

Heavy investment

In the report from iShares, it said clear policy direction, alongside investor concerns regarding a possible technology sector bubble in the United States, prompted significant movement into healthcare investments toward the end of last year. 

In November 2025, ETFs targeting this sector experienced their largest monthly global inflows in five years, attracting US$6.8 billion across the industry. 

With clarity now emerging for what has recently been an unloved sector, we see an opportunity for investors to refocus on the positive fundamentals and long-term supportive trends that may propel healthcare forward in 2026.

Despite gaining momentum, iShares believes the sector is still undervalued.

With healthcare valuations still looking cheap relative to global equities – trading at around a 13% discount despite the recent performance surge – now may be the time for investors to consider adding more exposure to the sector.

AI buildout and defensive safety

While some sectors are being threatened by AI takeover, healthcare shares are being positively impacted by AI.

Industry experts said AI is now increasingly being used in hospitals to automate clinical notes, staffing rosters and billing, freeing up staff for more valuable tasks, and patient care. 

Additionally, AI is beginning to transform the medical research field, accelerating drug development from early studies to human trials and market launch.

The report also reinforced that, as well as offering opportunities to tap into innovation and some of the long-term ‘mega forces’ shaping the global economy today, healthcare exposure can provide additional benefits for those looking to build a diversified share portfolio.

How do investors gain exposure to global healthcare?

For investors looking to add this sector to their portfolio, here are three ASX ETFs to consider. 

The first is the iShares Global Healthcare ETF (ASX: IXJ). It tracks the performance of the S&P Global 1200 Healthcare Sector Index. This index includes small, mid, and large-cap biotechnology, healthcare, medical equipment, and pharmaceuticals companies.

Another option is the BetaShares Global Healthcare ETF – Currency Hedged (ASX: DRUG). 

It is made up of 60 of the largest global healthcare companies (outside of Australia). 

Finally, Vaneck Vectors Global Health Leaders ETF (ASX: HLTH) invests in 50 fundamentally sound and attractively valued companies with the best growth prospects in the healthcare sector.

The post 3 reasons to target global healthcare in 2026 -expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pfizer. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.