Should You Invest in the iShares U.S. Medical Devices ETF (IHI)?

Designed to provide broad exposure to the Healthcare – Medical Devices segment of the equity market, the iShares U.S. Medical Devices ETF (IHI) is a passively managed exchange traded fund launched on May 1, 2006.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare – Medical Devices is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

The fund is sponsored by Blackrock. It has amassed assets over $4.34 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare – Medical Devices segment of the equity market. IHI seeks to match the performance of the Dow Jones U.S. Select Medical Equipment Index before fees and expenses.

The Dow Jones U.S. Select Medical Equipment Index measures the performance of the medical equipment sector of the U.S. equity market.

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.4%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.44%.

It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector — about 100% of the portfolio.

Looking at individual holdings, Abbott Laboratories (ABT) accounts for about 18.79% of total assets, followed by Intuitive Surgical Inc (ISRG) and Boston Scientific Corp (BSX).

The top 10 holdings account for about 76.07% of total assets under management.

The ETF has gained about 6.22% so far this year and was up about 7.89% in the last one year (as of 08/20/2025). In that past 52-week period, it has traded between $54.27 and $65.09.

The ETF has a beta of 0.88 and standard deviation of 18.11% for the trailing three-year period, making it a medium risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.