Which iShares Healthcare ETF Is the Better Buy: Biotech-Focused IBB or Broad IYH?
Key Points
The iShares U.S. Healthcare ETF offers a lower expense ratio and a higher dividend yield than the iShares Biotechnology ETF.
The iShares Biotechnology ETF provides concentrated exposure to over 200 biotech companies, while the iShares U.S. Healthcare ETF holds 100 diverse healthcare positions.
The iShares Biotechnology ETF delivered a significantly higher 1-year total return but historically exhibits higher price volatility and deeper drawdowns.
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The iShares Biotechnology ETF (NASDAQ:IBB) provides targeted exposure to U.S. biotech companies, while the iShares U.S. Healthcare ETF (NYSEMKT:IYH) offers broader diversification across the entire healthcare sector at a lower cost.
Both funds offer specialized entry points into the American healthcare system. While IYH includes pharmaceutical giants and medical equipment providers, IBB focuses on the high-growth, high-volatility biotechnology niche. This comparison helps investors determine whether concentrated sector risk or broad industry exposure better suits their portfolio needs.
Snapshot (cost & size)
| Metric | IBB | IYH |
|---|---|---|
| Issuer | iShares | iShares |
| Share price | $207.96 (as of 2026-10-05) | $70.91 (as of 2026-10-05) |
| Expense ratio | 0.44% | 0.37% |
| 1-yr return (as of 2026-10-05) | 38.0% | 17.4% |
| Dividend yield | 0.2% | 1.1% |
| Beta | 0.69 | 0.56 |
| AUM | $10.5B | $3.9B |
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.
The iShares U.S. Healthcare ETF is the more affordable choice with a 0.37% expense ratio compared to 0.44% for the iShares Biotechnology ETF. Furthermore, the iShares U.S. Healthcare ETF offers a notably higher yield for investors prioritizing income.
Performance & risk comparison
| Metric | IBB | IYH |
|---|---|---|
| Max drawdown (5 yr) | (35.7%) | (17.9%) |
| Growth of $1,000 over 5 years (total return) | $1,368 | $1,378 |
What's inside
The iShares U.S. Healthcare ETF holds 100 positions, with 99% of its assets in the healthcare sector and a 1% allocation to technology. Its largest positions include Eli Lilly (NYSE:LLY) at 14.60%, Johnson & Johnson (NYSE:JNJ) at 9.87%, and Abbvie (NYSE:ABBV) at 7.44%. The fund launched in 2000. iShares U.S. Healthcare ETF has paid $0.80 per share over the trailing 12 months, which on its recent ~$70.91 share price works out to a 1.1% yield.
The iShares Biotechnology ETF is more concentrated, holding 243 positions with 100% of its assets in the healthcare sector. Its top holdings include Gilead Sciences (NASDAQ:GILD) at 8.05%, Amgen Inc (NASDAQ:AMGN) at 7.63%, and Vertex Pharmaceuticals (NASDAQ:VRTX) at 7.54%. It launched in 2001. iShares Biotechnology ETF has paid $0.34 per share over the trailing 12 months, which on its recent ~$207.96 share price works out to a 0.2% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Healthcare is generating more investment headlines than it has in years, driven by record dealmaking, GLP-1 drug innovation, and a wave of biotech acquisitions showing no sign of slowing. The question is not whether healthcare belongs in a long-term portfolio, but how much risk you want to take on within it.
IBB has outperformed IYH in 2026, riding a strong biotech cycle fueled by M&A activity and a busy FDA approval calendar. But that outperformance comes at a price: IBB is more volatile, pays almost no dividend, and concentrates entirely in a sub-sector where a single clinical trial failure can move the fund sharply in either direction.
IYH spreads across the whole healthcare landscape and charges slightly less than IBB. It pays a dividend, holds up better during turbulent markets, and gives investors exposure to the GLP-1 revolution through Eli Lilly alongside more defensive names.
For most long-term investors, IYH's lower cost, income, and broader diversification make it the stronger foundation. IBB is the better bet for those with specific conviction in biotechnology's current momentum who can stomach the volatility that comes with owning it.
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Sara Appino 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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