VanEck Biotech vs. Invesco Healthcare: Which ETF Offers More Potential for Long-Term Growth?

VanEck Biotech ETF (NASDAQ:BBH) offers concentrated exposure to the high-growth biotechnology industry, while Invesco S&P 500 Equal Weight Health Care ETF (NYSEMKT:RSPH) provides equal-weighted access across the broader healthcare sector.

Investors seeking healthcare exposure must choose between deep specialization and broad diversification. The VanEck fund targets a narrow slice of genetic research and drug manufacturing, whereas the Invesco fund levels the playing field across 61 major healthcare companies within the S&P 500, balancing exposure between industry giants and mid-sized firms.

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.

The VanEck fund is slightly more affordable with an expense ratio of 0.35%, compared to 0.4% for the Invesco fund. The Invesco fund provides a higher payout, offering a 0.6% distribution yield versus 0.4% for the biotech-focused alternative.

Performance & risk comparison

What's inside

Invesco S&P 500 Equal Weight Health Care ETF focuses on providing equal exposure to healthcare components of the S&P 500, holding 61 positions. Its sector allocation includes 98% devoted to Healthcare and 2% exposure to Technology. Its largest positions include Moderna, Inc. (NASDAQ:MRNA) at 2.27%, Illumina, Inc. (NASDAQ:ILMN) at 2.18%, and Mettler-Toledo International, Inc. (NYSE:MTD) at 2.00%. The fund was launched in 2006 and has paid $0.22 per share over the trailing 12 months, which on its recent ~$37.59 share price works out to a 0.6% yield.

The VanEck Biotech ETF takes a different approach in that it is more concentrated, holding only 25 positions with a 100% allocation to the Healthcare sector. Its largest holdings include Amgen, Inc. (NASDAQ:AMGN) at 16.47%, Gilead Sciences, Inc. (NASDAQ:GILD) at 13.67%, and Vertex Pharmaceuticals (NASDAQ:VRTX) at 8.28%. It was established in 2011 and has paid $0.96 per share over the trailing 12 months, which on its recent ~$240.47 share price equates to a 0.4% yield.

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

Which looks like the better buy

For long-term investors, the Invesco S&P 500 Equal Weight Health Care ETF looks like the better buy, particularly given the opportunities developing across the broader healthcare industry.

The VanEck Biotech ETF certainly has its appeal. Advances in genetic medicine, cancer treatments, and drug development could create substantial growth opportunities in the coming years. However, with just 25 holdings and nearly 30% of its portfolio concentrated in Amgen and Gilead Sciences, investors are relying heavily on a relatively small group of companies.

The Invesco fund takes a broader approach, spreading its investments across more than 60 healthcare companies, including pharmaceutical manufacturers, medical device makers, and biotechnology firms. That diversification is particularly attractive as an aging population, advances in artificial intelligence, and growing demand for medical treatments create opportunities across the industry.

While VanEck's expense ratio is slightly lower at 0.35% versus 0.40%, Invesco offers a higher dividend yield and considerably less concentration risk. That modest difference in fees is unlikely to outweigh the benefits of broader exposure.

For investors looking to participate in healthcare's long-term growth without relying too heavily on the success of a handful of biotech companies, the Invesco S&P 500 Equal Weight Health Care ETF looks like the way to go.

RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen, Gilead Sciences, Illumina, Moderna, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.