Which Is the Better Healthcare ETF: Fidelity's Low-Cost FHLC or First Trust's High-Conviction FBT?
Key Points
Fidelity MSCI Health Care Index ETF provides broad sector exposure with 365 holdings at a much lower cost than First Trust NYSE Arca Biotechnology Index Fund.
First Trust NYSE Arca Biotechnology Index Fund focuses on a concentrated basket of 30 biotechnology stocks, leading to higher volatility and a deeper maximum drawdown.
While First Trust NYSE Arca Biotechnology Index Fund has achieved higher total returns over the last year and five-year periods, it carries a significantly higher expense ratio.
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Fidelity MSCI Health Care Index ETF (NYSEMKT:FHLC) offers broad healthcare exposure at a fraction of the cost, while First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) provides an aggressive, concentrated focus on biotechnology innovation.
Investors choosing between these funds must weigh the stability of a diversified healthcare portfolio against the growth potential and volatility of a niche biotechnology basket. While both target the medical space, the Fidelity fund provides a cheaper gateway to the broader industry, whereas FBT hones in on high-growth biotech firms.
Snapshot (cost & size)
| Metric | FBT | FHLC |
|---|---|---|
| Issuer | First Trust | Fidelity |
| Share price | $273.91 (as of 2026-08-27) | $83.48 (as of 2026-08-27) |
| Expense ratio | 0.55% | 0.08% |
| 1-yr return (as of 2026-08-27) | 59.2% | 29.2% |
| Dividend yield | N/A | 1.2% |
| Beta | 0.67 | 0.60 |
| AUM | $3.0 billion | $3.3 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.
Cost efficiency is a major differentiator in this matchup, as the Fidelity fund is significantly more affordable. With an expense ratio of 0.08%, it costs 0.47 percentage points less per year than the First Trust fund.
Performance & risk comparison
| Metric | FBT | FHLC |
|---|---|---|
| Max drawdown (5 yr) | (29.9%) | (17.7%) |
| Growth of $1,000 over 5 years (total return) | $1,588 | $1,331 |
What's inside
Fidelity MSCI Health Care Index ETF tracks the MSCI USA IMI Health Care Index, providing exposure to 365 different companies. Its largest positions include Eli Lilly & Co (NYSE:LLY) at 12.93%, Johnson & Johnson (NYSE:JNJ) at 8.81%, and AbbVie (NYSE:ABBV) at 6.30%. The portfolio covers 99% healthcare and 1% technology. This fund was launched in 2013.
First Trust NYSE Arca Biotechnology Index Fund is a more concentrated play, holding 30 biotechnology stocks. Its top holdings include Halozyme Therapeutics (NASDAQ:HALO) at 4.25%, NeoGenomics (NASDAQ:NEO) at 4.00%, and Corcept Therapeutics (NASDAQ:CORT) at 3.85%. It allocates 100% of its assets under management (AUM) to the healthcare sector. This fund was launched in 2006.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
The healthcare sector is generating more investment headlines than it has in years. Biopharma M&A surpassed $65 billion in the first quarter of 2026 alone, GLP-1 drugs continue reshaping medicine, and smaller biotech companies are attracting acquisition interest from pharmaceutical giants racing to replenish their pipelines.
FHLC owns a piece of everything healthcare touches, including pharmaceuticals, medical devices, health insurers, and biotech all under one roof, tracked passively at a rock-bottom cost. FBT concentrates in just 30 biotechnology companies with equal portfolio weight. When a smaller biotech gets acquired or lands a major drug approval, FBT feels the full impact. That design delivered extraordinary returns over the past year, but exposes investors to sharp declines when clinical trials disappoint.
FBT charges nearly seven times what FHLC does, a fee that demands consistent outperformance just to break even against the cheaper alternative. For most long-term investors, FHLC's broader diversification and lower cost make it the better buy. FBT rewards those with high conviction in biotechnology's current momentum who can absorb the volatility that comes with 30 concentrated positions.
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Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Corcept Therapeutics, and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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