Vanguard Health Care vs. VanEck Pharmaceutical: How Do These ETFs Stack Up?
Key Points
Vanguard Health Care ETF provides broad exposure to the health care sector, while the VanEck Pharmaceutical fund offers a highly concentrated portfolio.
Vanguard's ETF is significantly more cost-effective, with a 0.09% expense ratio compared to 0.36% for the VanEck fund.
The VanEck ETF has delivered higher total returns over the past five years but has historically experienced a deeper maximum drawdown.
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VanEck Pharmaceutical ETF (NASDAQ:PPH) offers concentrated exposure to global drugmakers, while Vanguard Health Care ETF (NYSEMKT:VHT) provides a much broader, lower-cost entry point into the diverse healthcare landscape.
Both funds target the resilient healthcare industry but from different angles. VHT tracks the whole sector, from biotech to hospitals, while PPH focuses specifically on the pharmaceutical industry. For investors, this choice boils down to a preference for broad diversification versus a targeted bet on drug manufacturers.
Snapshot (cost & size)
| Metric | VHT | PPH |
|---|---|---|
| Issuer | Vanguard | VanEck |
| Share price (as of July 2, 2026) | $308.41 | $111.39 |
| Expense ratio | 0.09% | 0.36% |
| 1-yr return (as of July 2, 2026) | 25.7% | 28.7% |
| Dividend yield | 1.6% | 2% |
| Beta | 0.59 | 0.45 |
| AUM | $20.4 billion | $970 million |
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.
The Vanguard fund is the clear leader in affordability, charging just 0.09% compared to the 0.36% for the VanEck offering. However, PPH provides a higher trailing dividend yield, currently sitting 0.40 percentage points above its peer.
Performance & risk comparison
| Metric | VHT | PPH |
|---|---|---|
| Max drawdown (5 yr) | (17.7%) | (20.3%) |
| Growth of $1,000 over 5 years (total return) | $1,323 | $1,666 |
What's inside
The VanEck fund concentrates its assets in the healthcare sector, specifically targeting drug production and marketing. Its portfolio is highly concentrated, with just 26 holdings, and its largest positions include Eli Lilly (NYSE:LLY) at 20.38%, Novartis (NYSE:NVS) at 10.6%, and Merck (NYSE:MRK) at 9.74%. The fund was launched in 2011. The VanEck ETF has paid $2.17 per share over the trailing 12 months, which on its recent ~$111.39 share price works out to a 2% dividend yield.
Vanguard’s ETF offers 100% healthcare exposure but spreads its reach across 429 holdings, covering medical equipment and health services in addition to pharmaceuticals. Its largest positions include Eli Lilly at 14.01%, Johnson & Johnson (NYSE:JNJ) at 8.45%, and AbbVie (NYSE:ABBV) at 6.08%. The fund was launched in 2004. The Vanguard ETF has paid $4.72 per share over the trailing 12 months, which on its recent ~$308.41 share price works out to a 1.6% dividend yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Comparing these two funds, there's a lot to like about the VanEck offering. Its one- and five-year returns are both higher than VHT's. It sports a higher dividend yield as well.
That said, PPH does have elevated concentration risk given it owns just 26 stocks. Indeed, the VanEck fund's top five holdings alone account for about 50% of the portfolio's value. It also has a meaningfully higher expense ratio than VHT.
Finally, while Vanguard's ETF is much larger in terms of assets under management, the two funds have about the same average trading volume, so investors interested in PPH aren't missing out on liquidity. If the expense ratio and concentration aren't concerns, aggressive investors might want to take a small position in the VanEck fund.
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Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Eli Lilly, and Merck. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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