Why has XLV declined year-to-date?

The decline is due to regulatory uncertainty in healthcare and rising costs, which have impacted company earnings.

What two factors could help XLV catch up to the market?

The two factors are regulatory policy clarity and improved relative valuations of the sector compared to the rest of the market.

Is XLV a good investment now?

We do not provide investment advice, but XLV may be a defensive option for investors seeking diversification in healthcare.

Two Factors That Will Decide Whether XLV Finally Catches the S&P 500 in 2026

The Health Care Select Sector SPDR ETF (XLV) is down about 3% year-to-date while the broader market grinds higher. An analysis points to two key factors that will decide whether the sector can catch up to the S&P 500 in 2026.

June 21, 2026

2 min read

Source: 24/7 Wall St.

Key Numbers

current price

$149

ytd change

-3%

one year return

+14%

According to 24/7 Wall St., the Health Care Select Sector SPDR ETF (XLV) is having a frustrating year, sitting at $149, down about 3% year-to-date while the broader market grinds higher. However, the fund has clawed back roughly 14% over the past year, and the 2026 setup looks meaningfully different.

The Two Key Factors

1. Regulatory Policies

Potential changes in healthcare policies, including drug pricing and insurance coverage, could significantly impact sector earnings. Any new legislation may create headwinds or tailwinds.

2. Relative Valuations

After underperforming, healthcare stock valuations have become cheaper relative to the rest of the market. If investor sentiment shifts toward defensive sectors, XLV could attract capital inflows.

Context

XLV has lagged the S&P 500 for several years, but analysts see potential for a recovery if regulatory clarity improves and earnings stabilize.

What It Means for Investors

XLV remains a defensive option in a diversified portfolio, but its future performance hinges heavily on U.S. policies and valuations. Investors are advised to monitor regulatory developments closely.

Frequently Asked Questions

XLV is an exchange-traded fund that tracks the healthcare sector of the S&P 500, including companies like UnitedHealth and Johnson & Johnson.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.