9 Health Care ETFs That Resist Recessions

Protection from a downturn.

A bunch of recent data points to the prospect of higher rates of inflation, and tough talk from the White House has stoked fears of trade war. That has left many investors looking for save haven assets. But where can they turn? One idea is the health care sector. The industry is among the most recession-proof parts of the global economy, since most folks will cut back on any other item before their prescriptions. Furthermore, heart attacks and car crashes are not tied to the economy, and hospitals will have plenty of customers regardless of GDP growth. Consider one of these nine health care ETFs to add some stability to your holdings.

Fidelity MSCI Health Care Index (FHLC)

As with many ETF strategies, investors should look at the basics before they dig down into more aggressive or complicated alternatives. And one of the most basic ways to bias your portfolio toward health care is with this Fidelity ETF. With more than 300 holdings and nearly 100 percent of assets allocated in domestic stocks, you'll have a wide swath of the American health care industry. Top holdings include consumer-health giant Johnson & Johnson (JNJ), insurer UnitedHealth Group (UNH) and drugmaker Pfizer (PFE). If you want extra weighting in these popular names as well as a small group of lesser-known players in the sector, this is a great addition to your portfolio.

Guggenheim Equal Weight Healthcare (RYH)

A subtle twist on the previous fund is the Guggenheim S&P 500 Equal Weight Healthcare ETF, designed to keep equal emphasis among its holdings. In the health care sector, ETFs weighted by market cap can be top heavy in some of the big multinational names and mostly ignore the smaller players. RYH only holds 62 securities and regularly rebalances to make sure they all have an equal share. Relying on bias toward a select group of stocks can deliver outsize gains when they rally, but in a downturn that strategy can do extra damage to your portfolio. That may make the equal weight approach of this Guggenheim ETF attractive in 2018.

Global X Longevity Thematic ETF (LNGR)

What if you're about making sure the stocks are the right picks for the current environment? Then this Global X ETF that's focused on the ailments of an aging society may be a great option. If you're looking for protection against a short-term market decline by investing in a durable, long-term trend, then there's no better place than this health care fund. Increased spending on an aging U.S. population is nearly certain, and this ETF is full of investments that tap into that trend. Specifically, the fund's investments include diabetes powerhouse Novo Nordisk (NVO) and Regeneron Pharmaceuticals (REGN), which has treatments for cancer and high cholesterol.

WisdomTree Japan Hedged Health Care Fund (DXJH)

For those who want to play the demographics game a bit differently, this WisdomTree fund focuses on health care companies that cater to an aging population overseas. Japan has been going through the demographic transformation that many experts expect America to experience over the coming decades. Just consider reports that adult diapers are set to outsell baby diapers as proof aging has impacted Japan in a major way. And with holdings like Tokyo-listed megacap Takeda Pharmaceutical Co., investors will have a piece of companies they don't otherwise have exposure to via conventional ETFs.

iShares Global Healthcare ETF (IXJ)

This fund offers a global approach to the sector that allows investors to share the stability of health care across corporations of all sizes and all geographies. You'll recognize some big domestic players since more than half of the assets are invested in U.S.-based companies. But you'll also find companies like Switzerland's Novartis (NVS). To be clear, there aren't any direct plays on risky emerging market health care companies here -- only established corporations that provide modern medicine to the developed world. That's important for anyone who wants to look beyond America's health care system but doesn't want to take on aggressive and unproven investments, such as Chinese small caps.

SPDR S&P Biotech ETF (XBI)

It's worth noting that small-cap stocks developing drugs or medical devices can deliver tremendous gains to investors. Investing in these risky picks is much easier said than done, however, and it's not uncommon for plenty of small-cap medical companies to drop precipitously. After all, most of these companies are simply burning cash as they research a cure. This all-or-nothing approach can be avoided rather simply with the XBI ETF. This fund offers a basket of small, ambitious players that collectively are sure to create some blockbuster drugs. XBI spreads your risk evenly across this subsector of health care for a much more reliable long-term return.

VanEck Vectors Pharmaceutical ETF (PPH)

Successful small biotech companies often are acquired by bigger pharmaceutical companies. So why not just cut out the middleman and go right for the stable megacaps of the pharmaceutical industry, with their reliable revenue created by deep pockets and big portfolios of blockbuster medications? That's what PHH offers, with a focused ETF that has just 26 total holdings at present. These picks are a who's who list of the industry, with Pfizer, Merck & Co. (MRK), Astrazeneca (AZN) and other familiar names. If you want stability, these large-cap pharma companies that own the biggest drugs of the day offer stability in an uncertain market.

iShares Medical Devices ETF (IHI)

While next-generation drugs do get a lot of attention, there is plenty of profit potential in the less glamorous business of medical devices and equipment. That's where this iShares ETF comes in. Top holdings include Abbott Laboratories (ABT), which is a leader in lab tools, and Medtronic (MDT), which specializes in cardiovascular technologies like stents. Some of these devices are high tech, but many medical devices such as gloves and IV tubes haven't changed all that much. More importantly, demand for these products has been constant in good times and bad -- and that makes IHI a great play if you fear an economic or market downturn.

iShares Healthcare Providers ETF (IHF)

An area of the health care system under a bit of uncertainty in recent years is the for-profit insurance sector. But after failed Republican efforts to repeal or replace Obamacare and with strong enrollment in government marketplaces late last year, the dust is now settling. That makes this iShares fund a choice for investors looking to avoid stock market volatility in 2018. Top holdings of this fund include pharmacy-benefits giants including Express Scripts Holding Co. (ESRX) and hospital operator HCA Healthcare (HCA), among others, who have consistent profits from their operations.

Jeff Reeves is currently executive editor of InvestorPlace.com. He is a stock analyst and financial commentator with almost two decades of newsroom and markets experience, contributing to The Wall Street Journal network, USA Today, CNBC, TheStreet.com, Fox Business Channel and US News. Follow him on Twitter @JeffReevesIP.