Which Is the Better State Street Healthcare ETF: The Broad XLV or the Biotech XBI?
Key Points
State Street Health Care Select Sector SPDR ETF provides a much lower expense ratio of 0.08% compared to the 0.35% for State Street SPDR S&P Biotech ETF.
State Street Health Care Select Sector SPDR ETF offers a higher trailing-12-month dividend yield of 1.6% while State Street SPDR S&P Biotech ETF pays 0.4%.
While State Street SPDR S&P Biotech ETF holds 155 stocks with an equal-weighted tilt, State Street Health Care Select Sector SPDR ETF holds 60 large-cap stocks from the S&P 500.
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While State Street Health Care Select Sector SPDR ETF (NYSEMKT:XLV) offers broad exposure to established healthcare giants at a minimal cost, State Street SPDR S&P Biotech ETF (NYSEMKT:XBI) provides a more volatile, equal-weighted focus on the biotechnology sub-sector.
Choosing between these two funds depends on the desired level of industry concentration and volatility tolerance. The State Street Health Care Select Sector SPDR ETF provides a diversified entry into the healthcare giants of the S&P 500, whereas the smaller State Street SPDR S&P Biotech ETF leans heavily into the high-risk potential of research-focused firms. This comparison analyzes cost, performance, and risk profiles to see which approach fits your portfolio.
Snapshot (cost & size)
| Metric | XBI | XLV |
|---|---|---|
| Issuer | SPDR | SPDR |
| Share price | $151.46 (as of 2026-07-30) | $163.52 (as of 2026-07-30) |
| Expense ratio | 0.35% | 0.08% |
| 1-yr return (as of 2026-07-30) | 76.4% | 24.0% |
| Dividend yield | 0.4% | 1.6% |
| Beta | 0.83 | 0.55 |
| AUM | $9.8 billion | $42.7 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.
The State Street Health Care Select Sector SPDR ETF is notably more affordable, with an expense ratio of 0.08% compared to the 0.35% charged by the biotech fund. This cost difference is accompanied by a 1.18 percentage point yield advantage for XLV, appealing to those seeking higher cash distributions.
Performance & risk comparison
| Metric | XBI | XLV |
|---|---|---|
| Max drawdown (5 yr) | (54.0%) | (17.1%) |
| Growth of $1,000 over 5 years (total return) | $1,235 | $1,342 |
What's inside
The State Street Health Care Select Sector SPDR ETF tracks 60 large-cap stocks within the Health Care Select Sector Index, offering exposure to pharmaceuticals, medical equipment, and healthcare providers. Because it is market-cap weighted, its largest positions include Eli Lilly (NYSE:LLY) at 15.97%, Johnson + Johnson (NYSE:JNJ) at 10.67%, and Abbvie (NYSE:ABBV) at 7.76%. The portfolio reflects 99% healthcare exposure with nominal cash holdings. It was launched in 1998. State Street Health Care Select Sector SPDR ETF has paid $2.53 per share over the trailing 12 months, which on its recent ~$163.52 share price works out to a 1.6% yield.
The State Street SPDR S&P Biotech ETF follows a modified equal-weight strategy across 155 biotechnology stocks, reducing the influence of individual giants in favor of broader industry participation. Its largest positions include Apogee Therapeutics (NASDAQ:APGE) at 1.64%, Oruka Therapeutics (NASDAQ:ORKA) at 1.39%, and Dianthus Therapeutics (NASDAQ:DNTH) at 1.37%. This concentration results in 100% healthcare exposure with a focus on high-growth sub-sectors. It was launched in 2006. State Street SPDR S&P Biotech ETF has paid $0.57 per share over the trailing 12 months, which on its recent ~$151.46 share price works out to a 0.4% yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Few sectors are moving as fast as healthcare right now, and within it, biotechnology has been the standout performer over the past year. Because XBI uses an equal-weight structure (which gives a small clinical-stage company the same portfolio influence as a larger biotech), it has amplified those gains dramatically, delivering tremendous returns that dwarfed XLV's over the trailing 12 months.
But that same design explains XBI's extreme volatility. A single FDA approval or clinical trial failure can move an equal-weighted biotech fund sharply in either direction, making it one of the most unpredictable ways to own healthcare.
XLV is built for a different kind of investor. Anchored by Eli Lilly, Johnson & Johnson, and AbbVie, it captures healthcare's defensive characteristics alongside its long-term growth potential. When markets turn turbulent, investors historically rotate into exactly these kinds of companies.
For most long-term investors, XLV is the more dependable healthcare foundation for a much cheaper price. XBI rewards those with specific conviction in biotechnology's current momentum and the risk tolerance to absorb sharp swings in pursuit of higher potential returns.
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Sara Appino has no position in any of the stocks mentioned. The Motley Fool recommends SPDR Series Trust - SPDR S&P Biotech ETF. The Motley Fool has a disclosure policy.
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