U.S. Health Care Depth or Global Industry Reach? VHT vs. IXJ
Key Points
iShares Global Healthcare ETF carries a higher expense ratio than Vanguard Health Care ETF
Vanguard Health Care ETF holds a significantly larger number of healthcare stocks providing broader exposure to the domestic sector
iShares Global Healthcare ETF focuses on global equities while Vanguard Health Care ETF concentrates on the U.S. market
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The choice between Vanguard Health Care ETF (NYSEMKT:VHT) and iShares Global Healthcare ETF (NYSEMKT:IXJ) hinges on geographic preference, as the iShares fund offers global exposure at a higher cost.
Healthcare stocks often serve as a cornerstone for defensive portfolios, offering potential stability through varying market cycles. Comparing Vanguard Health Care ETF (NYSEMKT:VHT) and iShares Global Healthcare ETF (NYSEMKT:IXJ) reveals how regional focus and management costs can influence long-term results. Both funds provide access to blue-chip pharmaceutical and medical device leaders, yet their differing geographic mandates and fee structures lead to distinct investment outcomes for those seeking sector-specific growth.
Snapshot (cost & size)
| Metric | VHT | IXJ |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.09% | 0.4% |
| 1-yr return (as of May 29, 2026) | 17.0% | 12.4% |
| Dividend yield | 1.72% | 1.46% |
| Beta | 0.64 | 0.58 |
| AUM | $18.5B | $3.6B |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Operating costs are a primary differentiator in this matchup, as the Vanguard fund is notably more affordable with a 0.09% expense ratio. By contrast, the iShares fund charges 0.4%, which may represent a meaningful drag on total returns over a long-term holding period. In terms of income, the Vanguard fund currently offers a slightly higher trailing-12-month payout than its global peer, though both yields remain modest compared to the broader market.
Performance & risk comparison
| Metric | VHT | IXJ |
|---|---|---|
| Max drawdown (5 yr) | -17.7% | -18.1% |
| Growth of $1,000 over 5 years (total return) | $1,254 | $1,238 |
What's inside
The iShares Global Healthcare ETF (NYSEMKT:IXJ) seeks to track global equities within the sector, giving investors exposure to medical innovation across international borders. Its largest positions include Eli Lilly (NYSE:LLY) at 11.42%, Johnson & Johnson (NYSE:JNJ) at 7.11%, and AbbVie (NYSE:ABBV) at 4.94%. With 114 holdings, it is more concentrated than the Vanguard alternative. Launched in 2001, the fund maintains a portfolio that is 99% healthcare and 1% cash or others. It has a trailing-12-month dividend of $1.36 per share.
The Vanguard Health Care ETF (NYSEMKT:VHT) provides broader exposure by holding 411 stocks, primarily focusing on domestic companies. Its largest positions include Eli Lilly (NYSE:LLY) at 12.15%, Johnson & Johnson (NYSE:JNJ) at 8.84%, and AbbVie (NYSE:ABBV) at 6.04%. Launched in 2004, it maintains a 100% tilt toward the healthcare sector. The fund has paid $4.70 per share over the trailing 12 months. This broader count allows for more exposure to mid-cap and small-cap firms that a more concentrated global fund might miss.
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What this means for investors
When investors consider health care ETFs, they are doing more than picking a defensive sector. They also need to decide whether to focus on U.S. health care companies or invest in a mix that includes global pharmaceutical, medical device, and health care service firms. That distinction sits at the center of the choice between the Vanguard Health Care ETF and the iShares Global Healthcare ETF.
VHT holds hundreds of U.S. healthcare stocks across large, mid, and smaller companies, giving investors deeper exposure to the domestic sector. IXJ owns a more concentrated group of global healthcare companies, which can add international reach but also introduce currency exposure and different regulatory systems. That distinction matters because healthcare returns are shaped not only by demand for drugs and medical services, but also by drug pricing, patent cycles, reimbursement rules, and regional policy decisions.
For investors, the decision is less about which fund is more defensive and more about where they want their health care exposure to come from. VHT is more straightforward for those seeking low-cost, broad U.S. sector exposure. IXJ may be better aligned with investors who want access to health care companies outside the U.S. and are comfortable paying a higher fee for that global reach.
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Eric Trie has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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