When 2022 Tore Through the S&P 500, This Healthcare ETF Barely Flinched. Why Isn't It in More Retirement Accounts?

The S&P 500 can be viewed as 11 component sectors rather than a single monolith. Consumer staples, healthcare, and utilities are commonly considered defensive because demand for essentials like medicine, electricity, toothpaste, groceries, and household items remains relatively inelastic during both booms and recessions. This creates steadier earnings profiles and lower volatility during market declines. The defensive effect has appeared across different downturn causes, including the dot-com crash, the 2008 financial crisis, the 2020 COVID-19 selloff, and the 2022 inflation-driven bear market. Some investors may not overweight these sectors despite shorter time horizons, even though market-cap index funds offer simplicity and low fees. A middle ground may involve sector ETFs such as the Vanguard Health Care ETF, which offers broad diversification and a 0.09% expense ratio.

"One ETF that I think fits that role particularly well is the Vanguard Health Care ETF (NYSEARCA: VHT), largely because it combines broad diversification with extremely low fees. It is one of Vanguard's 11 sector-specific ETFs and, like most Vanguard products, remains very affordable with a 0.09% expense ratio. On a $10,000 investment, that works out to just $9 annually in fee drag."

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