Does iShares Pharma ETF Offer Superior Returns to Invesco's Equal Weight Healthcare Fund?

The iShares U.S. Pharmaceuticals ETF (NYSEMKT:IHE) offers concentrated, low-beta pharmaceutical exposure, while Invesco S&P 500 Equal Weight Health Care ETF (NYSEMKT:RSPH) provides equal-weighted access to the broader healthcare sector at a slightly higher cost.

Both funds launched in 2006 and focus on the American healthcare landscape, but they differ significantly in their construction. iShares U.S. Pharmaceuticals ETF targets the pharmaceutical sub-sector using market-cap weighting, whereas Invesco S&P 500 Equal Weight Health Care ETF captures the entire S&P 500 healthcare sector, assigning roughly equal importance to each constituent.

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 the trading day on Aug. 27, 2026.

iShares U.S. Pharmaceuticals ETF is slightly more affordable with an expense ratio of 0.37% compared to 0.4% for Invesco S&P 500 Equal Weight Health Care ETF. Investors seeking income may also find the higher payout from the iShares fund more attractive.

Performance & risk comparison

What's inside

The Invesco S&P 500 Equal Weight Health Care ETF holds 59 stocks, leaning entirely into the healthcare sector, although occasionally the fund will hold minor exposure to technology as well. Because it is equal-weighted, it avoids the concentration risk often found in cap-weighted sector funds. Its largest positions include Moderna Inc (NASDAQ:MRNA) at 4.4%, Veeva Systems Inc (NYSE:VEEV) at 2.5%, and Charles River Laboratories International (NYSE:CRL) at 2.2%. It was launched in 2006. Invesco S&P 500 Equal Weight Health Care ETF has paid $0.23 per share over the trailing 12 months, which on its recent ~$37.61 share price works out to a 0.6% yield.

The iShares U.S. Pharmaceuticals ETF focuses solely on healthcare, with 56 holdings, and is strictly concentrated in the domestic pharmaceutical industry. Unlike its competitor, this fund is market-cap weighted, leading to significant concentration in industry giants. Its largest positions include Johnson & Johnson (NYSE:JNJ) at 22.5%, Eli Lilly & Co(NYSE:LLY) at 20.5%, and Merck & Co. (NYSE:MRK) at 5%. It was launched in 2006. iShares U.S. Pharmaceuticals ETF has paid $1.47 per share over the trailing 12 months, which on its recent ~$104.73 share price works out to a 1.4% yield.

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Which looks like the better buy?

Like most healthcare funds, each of these ETFs are completely invested in U.S. healthcare stocks.

But they have crucial differences investors might want to consider. IHE, the iShares healthcare fund, is mostly focused on large-cap stocks, with 59% of its portfolio dedicated to that style of equity. Just about 17% are in mid caps, all “value” stocks, and the balance are in small caps.

On the other hand, RSPH, the Invesco offering, is just 29% in large caps, with 53% of its holdings in mid caps and the balance in small caps.

The equal weighting of the Invesco fund also means it is more balanced throughout its holdings. The top 10 stocks in the ETF account for just about 23% of the portfolio. By comparison, the top 10 holdings of IHE account for 78% of its assets. That's a lot.

Still, it is hard to overlook the performance of the iShares ETF compared to its Invesco rival. IHE has beaten RSPH over the past three years and five years, returning 19.9% and 11.9%, respectively, compared to RSPH's annualized three-year returns of 9.6% and five-year returns of 5.2%.

Over the past decade, RSPH has been the better-performing ETF, returning 9.8% to IHE's 9.3%. The lower drawdown is a bonus for long-term investors, making IHE the pick for 2026.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly, Merck, Moderna, and Veeva Systems. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.