Milliman Healthcare Inflation Plus ETF (MHIP)
The Milliman Healthcare Inflation Plus ETF (ticker MHIP, launched April 2026) is a sibling to the Healthcare Inflation Guard ETF (MHIG), but with an important difference: while MHIG aims simply to match healthcare cost inflation, MHIP seeks to beat it. The fund invests across the same broad asset classes—healthcare equities, bonds, commodities, and alternatives—but with an active strategy designed to generate excess returns on top of the inflation hedge.
Milliman, the actuarial and management consulting firm that launched both products, faces a practical problem shared by pension funds, insurers, and wealthy individuals: healthcare costs are one of the largest unhedged risks in long-term financial planning. A standard stock-and-bond portfolio does not naturally protect against the specific inflation rate that matters most to someone concerned with healthcare. MHIG solves the basic problem by matching that inflation. But MHIP addresses the question many investors then ask: if we are going to build a portfolio around healthcare inflation, why settle for matching it? Why not aim higher?
The answer lies in the way MHIP’s portfolio managers apply Milliman’s deep research into healthcare trends and economics. Rather than simply allocate to “health stocks plus bonds plus alternatives” in proportions that track historical healthcare cost growth, MHIP’s managers actively reweight based on forward-looking signals. When the research suggests that drug prices are about to accelerate, they may overweight pharmaceutical equities. When economic data hint that interest-rate policy is about to tighten, they might reduce bond exposure or shift to shorter-duration bonds. The goal is to capture the base return—staying in sync with healthcare inflation—while making tactical bets that add extra return on top.
The fund holds the same broad universe of assets as MHIG: healthcare sector equities (pharmaceuticals, medical devices, health insurers, healthcare providers), fixed income (U.S. Treasuries, Treasury Inflation-Protected Securities to directly hedge inflation, corporate bonds with healthcare exposure, and potentially international bonds), and alternatives including commodities like medical metals and agricultural inputs that feed healthcare supply chains. But the allocation is fluid. In a single quarter, the portfolio might shift from 45% equities to 35% as managers take profits and rotate into bonds. In the next quarter, as confidence in healthcare demand recovery builds, it might move back to 50% equities.
This is where the risk-and-return picture becomes more complicated than MHIG. Active management works in two directions. If the managers are right about their tactical calls—if they overweight equities before a healthcare rally or trim exposure before a correction—then MHIP will deliver outperformance, meaningfully beating the base healthcare inflation rate. But if those calls prove wrong, MHIP will lag. An overweight position that was meant to capture a rally can instead lock in losses; a defensive shift that seemed prudent can cause the fund to miss a rally it should have participated in. The volatility of MHIP is likely to exceed that of MHIG because of this active positioning, and the distribution of outcomes is wider—both higher highs and lower lows.
Like MHIG, MHIP carries a 0.55% annual expense ratio, which is modest for an actively managed fund. The fee structure includes a temporary waiver of acquired fund fees and expenses through April 2027. But active management also creates another cost: portfolio turnover. If managers are reweighting allocations frequently, the fund will buy and sell securities more often than a passive index fund would, triggering trading costs and potentially tax consequences for shareholders in taxable accounts. Those hidden costs can whittle down the excess returns MHIP is seeking to generate.
The differentiation between MHIG and MHIP points to a fundamental question about active management. MHIP’s backers argue that healthcare economics are complex enough, and the forward-looking signals strong enough, that skilled managers can consistently tilt allocation decisions in the fund’s favor. Healthcare sector dynamics—which drugs are coming off patent, where biotech innovation is concentrated, how regulatory policy is shifting—are not random noise; they follow patterns that experienced analysts can learn to read. MHIP is betting that Milliman’s research team has that expertise and can translate it into real outperformance.
For investors, the choice between MHIG and MHIP is partly about conviction. If you want a pure healthcare inflation hedge with minimal complexity and let the professionals make tactical calls, MHIG is simpler. If you believe Milliman’s team has genuine edge in healthcare economics and want exposure to their alpha (the fancy term for “excess returns from skill”), MHIP makes sense. But alpha is never guaranteed, and it tends to come in cycles. A period of strong outperformance can be followed by years of underperformance. Over very long periods—decades—passive indexing often outperforms active management after fees; over shorter periods, skill can shine through.
Both funds are very new (they launched in April 2026), so there is no track record yet to evaluate. Anyone considering either should read the prospectus carefully, understand the managers’ philosophy, and think about whether the base thesis (healthcare inflation matters enough to hedge specifically) applies to their situation. For institutional investors with long-dated healthcare liabilities and for retirees expecting significant future healthcare costs, both make logical candidates. For others, they are specialized tools that belong only in the toolkit if the specific risk they hedge actually threatens the portfolio.