GLP-1 Drugs Powered IHE's Big Year. IXJ Is Playing a Longer Game.

iShares U.S. Pharmaceuticals ETF (NYSEMKT:IHE) offers concentrated exposure to domestic drugmakers, while iShares Global Healthcare ETF (NYSEMKT:IXJ) provides a broader, international footprint across the wider healthcare sector.

While IHE narrows its focus to companies specifically engaged in the research, development, and production of pharmaceuticals in the U.S., IXJ casts a wider net across various healthcare subsectors on a global scale. This comparison evaluates how these different scopes impact costs, risk, and total performance.

Snapshot (cost & size)

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.

Investors pay nearly identical management fees for these funds, with the 0.40% expense ratio of the iShares global fund sitting just 0.02 percentage points above its pharmaceutical counterpart. The iShares pharmaceutical fund offers a slightly higher distribution yield of 1.70%.

Performance & risk comparison

What's inside

The iShares global fund offers a diversified approach to the healthcare space, containing 114 holdings. Its portfolio includes global companies in the pharmaceuticals, biotechnology, and healthcare equipment industries. Its largest positions include Eli Lilly (NYSE:LLY) at 10.50%, Johnson & Johnson (NYSE:JNJ) at 7.19%, and AbbVie (NYSE:ABBV) at 4.88%. This fund was launched in 2001, has a trailing-12-month dividend of $1.36 per share, and maintains assets under management (AUM) of $3.6 billion.

In contrast, the iShares pharmaceutical fund targets a much narrower segment of the market with its 55 holdings. Its top holdings include Eli Lilly (NYSE:LLY) at 22.91%, Johnson & Johnson (NYSE:JNJ) at 21.22%, and Viatris (NASDAQ:VTRS) at 5.24%. Because it focuses exclusively on domestic drugmakers, it has high concentration in its top two holdings. Launched in 2006, the fund has paid $1.49 per share over the trailing 12 months and manages approximately $883.6 million in AUM.

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What this means for investors

There’s been a significant performance gap between these two ETFs over the past year, and it comes down largely to one reason: GLP-1s.

Eli Lilly, whose weight-loss and diabetes drugs Mounjaro and Zepbound became two of the fastest-growing pharmaceutical products in history, sits as a top holding in IHE. As GLP-1 drugs reshaped the pharmaceutical landscape in 2025, concentrated domestic pharma funds captured that wave directly. IXJ's broader global mandate spread exposure across biotechnology, medical devices, and international healthcare companies, diluting the GLP-1 effect considerably.

For long-term investors, the lesson cuts both ways. Concentration in IHE delivered extraordinary recent returns but creates real vulnerability if the GLP-1 tailwind slows or drug pricing pressure intensifies. IXJ's broader approach smooths those peaks and valleys across the full healthcare ecosystem. Both funds charge nearly identical fees, making the choice purely about how much concentration an investor wants in a single corner of healthcare.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.