Better Healthcare ETF: VanEck's Biotech-Focused BBH vs. State Street's XPH Targeting Pharma
Key Points
The VanEck Biotech ETF and State Street SPDR S&P Pharmaceuticals ETF both carry an identical expense ratio of 0.35%.
The State Street SPDR S&P Pharmaceuticals ETF is more diversified with 62 holdings, while the VanEck Biotech ETF focuses on 25 holdings.
While the VanEck Biotech ETF led in 1-year performance, the State Street SPDR S&P Pharmaceuticals ETF delivered higher growth over a five-year period.
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The VanEck Biotech ETF (NASDAQ:BBH) offers concentrated exposure to large-cap biotech leaders, while the State Street SPDR S&P Pharmaceuticals ETF (NYSEMKT:XPH) provides broader, more diversified access to the pharmaceutical industry.
Investors seeking targeted healthcare exposure often weigh the specialized growth potential of biotechnology against the broader stability of pharmaceuticals. This comparison examines how these two industry-specific funds differ in strategy, concentration, and long-term results to help determine which approach fits a portfolio's specific needs.
Snapshot (cost & size)
| Metric | BBH | XPH |
|---|---|---|
| Issuer | VanEck | State Street |
| Share price | $240.47 (as of 2026-10-09) | $64.65 (as of 2026-10-09) |
| Expense ratio | 0.35% | 0.35% |
| 1-yr return (as of 2026-10-09) | 48.35% | 36.23% |
| Dividend yield | 0.4% | 0.4% |
| Beta | 0.55 | 0.56 |
| AUM | $487.7 million | $524.0 million |
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-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both funds are equal in terms of affordability, as each carries an expense ratio of 0.35%. Additionally, their recent payouts are aligned, with a yield gap of only 0.02 ppt between the two funds.
Performance & risk comparison
| Metric | BBH | XPH |
|---|---|---|
| Max drawdown (5 yr) | (39.9%) | (35.0%) |
| Growth of $1,000 over 5 years (total return) | $1,253 | $1,374 |
What's inside
The State Street SPDR S&P Pharmaceuticals ETF allocates 100% of its portfolio to the healthcare sector and holds 62 different securities. Its largest positions include Xeris Biopharma Holdings(NASDAQ:XERS) at 2.47%, Amneal Pharmaceuticals (NASDAQ:AMRX) at 2.30%, and Veradermics (NYSE:MANE) at 2.23%. It was launched in 2006, and has paid $0.27 per share over the trailing 12 months, which on its recent ~$66.89 share price works out to a 0.4% yield.
The VanEck Biotech ETF also maintains a 100% weighting in healthcare, but it is far more concentrated with only 25 holdings. Top holdings include Amgen (NASDAQ:AMGN) at 15.25%, Gilead Sciences (NASDAQ:GILD) at 13.28%, and Vertex Pharmaceuticals (NASDAQ:VRTX) at 8.23%. It was launched in 2011, and has paid $0.96 per share over the trailing 12 months, which on its recent ~$245.34 share price works out to a 0.4% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
The State Street SPDR S&P Pharmaceuticals ETF (XPH) and the VanEck Biotech ETF (BBH) offer two distinct methods of investing in the healthcare industry. Deciding between the two comes down to whether you prefer BBH's focus on biotech leaders or XPH's broader, more evenly distributed pharmaceutical portfolio.
BBH targets a handful of biotech companies, focusing on those that are the most liquid in the industry based on market cap and trading volume. This helps active traders, leading to tight bid-ask spreads and fast execution with low slippage. While the fund is comprised of 95% U.S. companies, it includes some international stocks.
The nature of the biotech sector leads to spectacular growth, as demonstrated by BBH's one-year return, and larger drops, indicated by the ETF's higher max drawdown. Therefore, the fund is for investors who are comfortable with that kind of volatility in exchange for the potential of outsized returns.
XPH can be more appealing for conservative investors, given its lower historical volatility. It uses an equal-weighted approach, so no one company dominates the fund's performance. The ETF is also U.S. only, so it holds no international stocks. It sports greater diversification than BBH thanks to its larger number of holdings, but like the VanEck fund, its focus on a single sub-sector within healthcare means it's vulnerable to industry downturns.
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Robert Izquierdo has positions in Amgen. The Motley Fool has positions in and recommends Amgen, Gilead Sciences, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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