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We reviewed funds in the Investment Association (IA) Healthcare and Biotechnology sector using performance data to 31 August 2026.
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The sector averaged 10.14% over 6 months, 29.77% over 1 year and 20.36% over 5 years.
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The highest returning fund with 5-year data returned 45.73%, while the lowest returning fund fell by 8.60%.
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Only 5.0% of funds reviewed achieved a top performing 4 or 5 star Yodelar Rating, while 60.0% received a weaker 1 or 2 star rating.
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Investors holding healthcare funds should check whether the fund has performed well against sector peers and whether the exposure still fits the wider portfolio.
Why Healthcare Funds Are Attracting More Attention
Healthcare and biotechnology funds have become easier for investors to notice. From 1 June 2026, the Investment Association renamed the sector IA Healthcare and Biotechnology and allowed biotechnology funds to be included, giving investors a clearer way to compare funds in this area.
The sector is still small, with £3.2 billion under management, but the investment case is easy to understand. Ageing populations, medical innovation, new treatments and rising demand for healthcare services all give the sector a strong long-term story. The World Health Organisation expects the number of people aged 60 and over to rise to 1.4 billion by 2030 and 2.1 billion by 2050.
But a strong story does not automatically mean strong fund performance.
Our latest data shows why investors still need to check the funds they hold. The IA Healthcare and Biotechnology sector averaged 29.77% over 1 year and 20.36% over 5 years. However, only 5.0% of funds achieved a 4 or 5 star Yodelar Rating, while 60.0% received a weaker 1 or 2 star rating.
That is the key issue. Healthcare may be an attractive theme, but many funds in the sector have not consistently ranked well against sector peers. Investors should therefore judge the fund, not just the sector story.
Healthcare Fund Performance Summary
Across the IA Healthcare and Biotechnology funds reviewed, 5.0% received a top performing 4 or 5 star Yodelar Rating. In contrast, 60.0% received a weaker 1 or 2 star rating by ranking among the lower performers in the sector over the periods analysed.
How Yodelar Rates Fund Performance
Healthcare Sector Performance
The table below shows the average performance of funds in the IA Healthcare and Biotechnology sector.
| Funds reviewed | Average 1-month return | Average 3-month return | Average 6-month return | Average 1-year return | Average 3-year return | Average 5-year return | |
|---|---|---|---|---|---|---|---|
|
20 |
2.98% |
13.36% |
10.14% |
29.77% |
26.92% |
20.36% |
The sector produced positive average returns across the main periods reviewed, with particularly strong average returns over 1 year. However, the average does not show the full picture.
Some funds performed strongly over shorter periods but lagged over 5 years. Others had steadier longer-term results but were less impressive over recent months. This is why healthcare funds should not be judged by the sector label alone.
5 Highest Returning Healthcare Funds
The table below shows five of the highest returning funds in the IA Healthcare and Biotechnology sector over 5 years. These funds are not recommendations. They are included to show where the strongest historic returns were achieved within the sector.
|
Fund |
1-month return |
3-month return |
6-month return |
1-year return |
3-year return |
5-year return |
5-year sector rank |
Yodelar Rating |
|---|---|---|---|---|---|---|---|---|
|
Polar Capital Healthcare Opportunities I EUR |
2.42% |
9.82% |
9.90% |
25.40% |
42.61% |
45.73% |
1/16 |
3 stars |
|
Polar Capital Global Healthcare Select I Acc GBP |
0.37% |
8.27% |
7.61% |
25.26% |
25.59% |
39.42% |
2/16 |
3 stars |
|
iShares S&P 500 Health Care Sector UCITS ETF CHF |
0.43% |
12.91% |
6.78% |
26.95% |
23.78% |
37.85% |
3/16 |
2 stars |
|
Xtrackers MSCI USA Health Care UCITS ETF 1D USD |
1.23% |
13.54% |
7.70% |
26.64% |
24.36% |
36.37% |
4/16 |
2 stars |
|
AXA Framlington Health Z Inc |
4.91% |
15.48% |
11.92% |
23.78% |
19.38% |
28.67% |
5/16 |
2 stars |
The strongest 5-year performer was Polar Capital Healthcare Opportunities, which returned 45.73% and ranked 1st out of 16 funds with 5-year data. Polar Capital Global Healthcare Select ranked 2nd, with a return of 39.42%.
The table also shows why investors should read the Yodelar Rating alongside the performance figures. Several of the highest 5-year performers did not receive a 4 or 5 star rating. This is because the rating considers performance consistency across the periods analysed, not just one return figure.
5 Lowest Returning Healthcare Funds
The table below shows five of the lowest returning funds in the IA Healthcare and Biotechnology sector over 5 years. These funds are not automatically unsuitable, but their performance and sector rankings may warrant closer review.
|
Fund |
1-month return |
3-month return |
6-month return |
1-year return |
3-year return |
5-year return |
5-year sector rank |
Yodelar Rating |
|---|---|---|---|---|---|---|---|---|
|
L&G Healthcare Technology & Innovation ETF |
8.96% |
20.65% |
17.97% |
41.58% |
44.51% |
-8.60% |
16/16 |
3 stars |
|
GS Global Future Health Care Equity Portfolio R Inc GBP |
1.43% |
11.71% |
7.79% |
15.46% |
10.73% |
-5.97% |
15/16 |
1 star |
|
JSS Sustainable Equity - Future Health E Acc |
0.92% |
7.41% |
4.02% |
18.12% |
14.93% |
-2.53% |
14/16 |
1 star |
|
iShares Healthcare Innovation ETF |
8.76% |
19.81% |
15.90% |
34.90% |
39.37% |
5.11% |
13/16 |
2 stars |
|
Polar Capital Healthcare Discovery I Acc |
3.72% |
17.16% |
22.98% |
42.19% |
34.19% |
13.31% |
12/16 |
3 stars |
* Source: hub.yodelar.com. Performance figures up to 30th August 2026. **Past performance is not a guide to future returns
This table highlights an important point for investors. A fund can have strong recent returns and still have a weaker 5-year record.
L&G Healthcare Technology & Innovation returned 41.58% over 1 year and 44.51% over 3 years, but it was the lowest returning fund over 5 years in the sector, with a return of -8.60%. That does not mean the fund is unsuitable for every investor, but it does show why one performance period should not be used in isolation.
What Healthcare Investors Should Review
We reviewed funds in the Investment Association (IA) Healthcare and Biotechnology sector using performance data to 31 August 2026.
The sector remains one of the smaller IA sectors, with around £3.2 billion under management, but it has been attracting growing interest. An ageing global population and a wave of breakthroughs, including new obesity and diabetes treatments and advances in AI assisted drug discovery, have put healthcare firmly in the spotlight.
On average, funds in the sector returned 10.14% over six months, 29.77% over one year and 20.36% over five years. The highest returning fund with five year data returned 45.73%, while the lowest fell by 8.60%.
Only 5.0% of funds reviewed achieved a top performing 4 or 5 star Yodelar Rating, while 60.0% received a weaker 1 or 2 star rating.
If you hold a healthcare fund, check how it has performed against its peers, and whether it still earns its place in your portfolio.
Get A Free Portfolio Analysis
Many investors hold healthcare exposure through dedicated healthcare funds, global funds, US funds or tracker funds without knowing how much their portfolio depends on the same areas.
Our free portfolio analysis reviews each fund individually, showing available 1, 3 and 5-year performance, sector ranking and Yodelar Rating. Yodelar Ratings are based on historic sector-relative performance and are not a guide to future returns.
The analysis can also help identify weaker-rated holdings, duplication, concentration, higher charges and funds that may no longer have a clear role.
It does not provide personal advice or recommend whether to buy, sell or switch any investment. It is designed to give investors a clearer view of their portfolio before deciding whether further review may be useful.
Speak To An Adviser
For investors who want to understand whether their current portfolio remains suitable, a no obligation call with an adviser from our advice partner, MKC Wealth, can help.
The discussion can cover current holdings, portfolio analysis results, objectives, time horizon and attitude to risk. Any personal recommendation would only be made after understanding the investor’s financial position, investment objectives and risk profile.
