Is the iShares Healthcare ETF or the Invesco Nasdaq Biotech ETF the Better Bet for Investors in 2026?

Investors choosing between iShares Global Healthcare ETF (NYSEMKT:IXJ) and Invesco Nasdaq Biotechnology ETF (NASDAQ:IBBQ) may weigh broad global diversification and higher dividend yields against lower costs and specialized high-growth potential.

Both ETFs target the healthcare sector, but their geographic and industry scopes differ significantly. While one provides broad global exposure to medical giants, the other offers a focused play on the biotechnology and pharmaceutical innovation occurring on the Nasdaq. This analysis compares their costs, risk profiles, and recent performance.

Snapshot (cost & size)

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 as of the close of trading on July 20.

Cost-conscious investors may find the Invesco fund more affordable with its 0.19% expense ratio compared to 0.40% for the iShares fund. However, the iShares fund offers a higher payout for those seeking regular income from their healthcare holdings.

Performance & risk comparison

What's inside

iShares Global Healthcare ETF provides exposure to 110 pharmaceutical, biotechnology, and medical device companies across both developed and emerging markets. This global reach offers a broader lens than sub-sector funds. Its largest positions include Eli Lilly & Co (NYSE:LLY) at 10.9%, Johnson & Johnson (NYSE:JNJ) at 7%, and Abbvie (NYSE:ABBV) at 5.1%. It was launched in 2001. iShares Global Healthcare ETF has paid $1.44 per share over the trailing 12 months, which on its recent ~$98.12 share price works out to a 1.50% yield.

Invesco Nasdaq Biotechnology ETF tracks the Nasdaq Biotechnology Index, targeting 251 firms classified as biotechnology or pharmaceutical. The portfolio is more concentrated in high-growth medical innovations. Top holdings include Vertex Pharmaceuticals (NASDAQ:VRTX) at 8.1%, Amgen (NASDAQ:AMGN) at 7.9%, and Gilead Sciences (NASDAQ:GILD) at 6.9%. It was launched in 2021. Invesco Nasdaq Biotechnology ETF has paid $0.26 per share over the trailing 12 months, which on its recent ~$32.04 share price works out to a 0.80% yield.

Which fund is the better buy?

Both these funds offer access to global pharmaceutical companies at a similar expense ratio. But there are differences to take into account when considering whether to invest in one or the other.

IXJ, the iShares ETF, is about three-quarters focused on U.S. stocks, with nearly all the balance in developed, non-U.S. markets (1% of its holdings are in emerging markets). By comparison, IBBQ, the Invesco fund, it nearly all U.S. stocks, with 6% in developed and emerging markets.

IBBQ is much more weighted in small caps compared to IXJ, with 38% of its holdings in small caps compared to 1% for IXJ. IBBQ also has 36% of its stock holdings in mid caps, versus 16% for its iShares competitor.

So which fund is the better buy? The choice comes down to performance. IBBQ bests IXJ in every time frame back through the 5-year look-back. IBBQ has returned 15.3% to 2% year-to-date, 18% versus 6.6% for IXH in the past three years, and 5.7% to 4.9% in the 5-year time frame.

IXJ’s much milder maximum drawdown and better dividend are reasons for investors more interested in stability to consider going with iShares here, but if long-term performance is your goal, the Invesco IBBQ ETF is the choice for 2026.

For more guidance on ETF investing, check out the full guide at this link.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.