Fidelity Healthcare ETF (FHLC) vs. VanEck Biotech ETF (BBH): Which Fund Is the Better Buy?
Key Points
FHLC features a much lower expense ratio of 0.08% compared to 0.35% for BBH.
BBH is a concentrated portfolio of just 26 stocks, while FHLC holds around 350 companies.
FHLC has historically shown lower volatility and a smaller maximum drawdown than the more specialized BBH.
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Healthcare investors often choose between capturing the entire sector versus targeting high-growth sub-industries such as biotechnology.
The Fidelity MSCI Health Care Index ETF (NYSEMKT:FHLC) provides broad, low-cost exposure to the full healthcare sector, whereas the VanEck Biotech ETF (NASDAQ:BBH) offers a concentrated, higher-fee play specifically on biotechnology innovators. Here's how these two ETFs compare on risk, performance, fees, and other factors that matter for investors.
Snapshot (cost & size)
| Metric | BBH | FHLC |
|---|---|---|
| Issuer | VanEck | Fidelity |
| Share price (as of Sept. 24, 2026) | $240.14 | $82.80 |
| Expense ratio | 0.35% | 0.08% |
| 1-yr return (as of Sept. 24, 2026) | 45.03% | 25.99% |
| Dividend yield | 0.40% | 1.23% |
| Beta (5Y monthly) | 0.62 | 0.58 |
| Assets under management (AUM) | $469.4 million | $3.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
FHLC is significantly more affordable, with an expense ratio of 0.08% compared to BBH's 0.35%. The difference in expenses can significantly impact long-term total returns, as fees compound over years of ownership. The Fidelity fund also offers a higher dividend payout, which could appeal to income-oriented investors.
Performance & risk comparison
| Metric | BBH | FHLC |
|---|---|---|
| Max drawdown (5 yr) | -39.9% | -17.7% |
| Growth of $1,000 over 5 years (total return) | $1,125 | $1,320 |
What's inside
FHLC provides broad exposure through a portfolio of around 350 holdings, and its largest positions include Eli Lilly, Johnson & Johnson, and AbbVie. It was launched in 2013 and has paid $1.27 per share in dividends over the trailing 12 months.
In contrast, BBH is highly concentrated, holding just 26 stocks. Its top holdings include Amgen, Gilead Sciences, and Vertex Pharmaceuticals, and the portfolio is 100% focused on biotechnology and life sciences companies. It was launched in 2011 and has paid $0.96 per share in dividends over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Choosing between FHLC and BBH depends on your diversification goals and risk tolerance.
FHLC offers broader diversification within the healthcare sector, providing exposure to more than 300 stocks. Around 24% of the fund is allocated to biotech stocks, but it also focuses heavily on pharmaceutical companies, healthcare providers and services, equipment, and life sciences tools and services.
BBH's narrower approach has resulted in greater volatility, as its significantly steeper max drawdown suggests larger price swings over the last five years. That's typical for more targeted ETFs, as less diversification can sometimes create more risk.
However, BBH has also significantly outperformed FHLC in 12-month total returns, which is a silver lining of smaller funds. With fewer stocks, it's less likely that underperformers will drag down the fund's overall returns.
Investors who are more risk-averse or seeking wider coverage of the healthcare sector may prefer FHLC for its broader approach. On the other hand, BBH could be the better buy for more risk-tolerant investors looking to fill a specific gap within their portfolio.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Amgen, Eli Lilly, Gilead Sciences, and Vertex Pharmaceuticals. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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