State Street vs. First Trust: Is a Broad Healthcare or Biotech Focus Better for Your Portfolio?
Key Points
State Street Health Care Select Sector SPDR ETF offers a significantly lower expense ratio of 0.08% compared to the 0.55% charged by First Trust NYSE Arca Biotechnology Index Fund.
First Trust's fund focuses exclusively on 30 biotechnology companies, while the SPDR ETF holds 60 stocks across the broader healthcare sector.
SPDR's fund has experienced a smaller five-year maximum drawdown of 17.1% compared to the 29.9% drawdown for the First Trust ETF.
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Determining whether State Street Health Care Select Sector SPDR ETF (NYSEMKT:XLV) or First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) fits a portfolio depends on an investor's preference for broad-sector stability or concentrated biotechnology exposure.
Both funds target the healthcare space but with very different scopes. XLV tracks the entire healthcare sector within the S&P 500, including giants in pharmaceuticals and medical devices. FBT focuses strictly on biotechnology companies, offering a narrower and historically more volatile path into medical innovation.
Snapshot (cost & size)
| Metric | FBT | XLV |
|---|---|---|
| Issuer | First Trust | SPDR |
| Share price (as of July 27, 2026) | $246.74 | $163.40 |
| Expense ratio | 0.55% | 0.08% |
| 1-year return (as of July 27, 2026) | 48.5% | 21.8% |
| Dividend yield | N/A | 1.6% |
| Beta | 0.66 | 0.55 |
| AUM | $2.8 billion | $42.1 billion |
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.
XLV is the more affordable option, charging just 0.08% annually. FBT’s expense ratio of 0.55% is significantly higher. These costs reflect the difference between a broad market index and a specialized, industry-specific strategy.
Performance & risk comparison
| Metric | FBT | XLV |
|---|---|---|
| Max drawdown (5 year) | (29.9%) | (17.1%) |
| Growth of $1,000 over 5 years (total return) | $1,467 | $1,346 |
The SPDR fund provides focused exposure to the broader healthcare industry within the S&P 500, covering sectors such as pharmaceuticals and health technology. Its largest positions include Eli Lilly (NYSE:LLY) at 16.13%, Johnson & Johnson (NYSE:JNJ) at 10.81%, and AbbVie at 7.81%. The fund has 60 holdings in total. It was launched in 1998. This vehicle allows investors to make targeted, strategic allocations more precisely than traditional style-based investment options.
The First Trust ETF is 100% concentrated in the healthcare sector, specifically the biotechnology subsector. Its portfolio consists of 30 holdings and mirrors the price movements of the NYSE Arca Biotechnology Index. Its top holdings include BeOne Medicines (NASDAQ:ONC) at 3.66%, Halozyme Therapeutics (NASDAQ:HALO) at 3.61%, and Amgen (NASDAQ:AMGN) at 3.48%. The fund was launched in 2006. Its core objective is to closely match its benchmark index before accounting for operating fees and expenses.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
This ETF showdown is basically a decision between concentration and diversification, and small versus large. Put another way, the ETF you prefer will likely reflect your overall comfort level with investing risk.
The SPDR fund has twice as many holdings as FBT, which helps spread out your risk. It's also significantly larger in terms of assets under management; XLV has over $40 billion in AUM, while the First Trust fund doesn't even crack $3 billion. That size differential has knock-on effects, too. FBT's average trading volume is almost a rounding error compared to the SPDR fund, meaning it has less liquidity, which may influence some investors' decisions here.
A final thing to consider regarding concentration is what these ETFs hold in their portfolios. FBT is straight biotechs -- just 30 in total. It is not uncommon for stocks in the same subsector to trade in sympathy; if Amgen reports a disappointing quarter, multiple constituents in the ETF could swoon. In contrast, among its top 10 positions, the SPDR fund includes several big pharmas, a medical device specialist, and a health insurer. This diversification could provide some downside protection.
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Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Amgen, BeOne Medicines, and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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