Which Healthcare ETF Is the Better Buy: State Street’s Pharma XPH or Simplify’s Mission-Driven PINK?

While State Street SPDR S&P Pharmaceuticals ETF (NYSEMKT:XPH) provides lower-cost, indexed exposure to the pharmaceutical industry, Simplify Health Care ETF (NYSEMKT:PINK) offers an active, broader approach with a philanthropic mission.

These funds offer two distinct paths into the healthcare sector. XPH focuses specifically on the pharmaceutical sub-sector through a passive index, while PINK provides a broader, actively managed approach to medical innovation. The Simplify fund also features a unique philanthropic structure, pledging its net management profits to breast cancer research.

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 Simplify fund is more expensive, carrying a 0.51% expense ratio compared to the 0.35% for the SPDR fund. However, the Simplify fund provides a higher payout, offering a yield gap of 0.34 percentage points.

Performance & risk comparison

What's inside

Simplify Health Care ETF provides actively managed exposure to medical technology and biotechnology through a portfolio of 58 holdings. It primarily allocates 91% to healthcare, with small 5% and 4% tilts toward consumer cyclical and industrial sectors, respectively. Its largest positions include Humana (NYSE:HUM) at 8.04%, Arcutis Biotherapeutics (NASDAQ:ARQT) at 7.18%, and Johnson + Johnson (NYSE:JNJ) at 7.16%. The fund, which utilizes a currency hedge, was launched in 2021. Simplify Health Care ETF has paid $0.30 per share over the trailing 12 months, which on its recent ~$38.85 share price works out to a 0.8% yield.

State Street SPDR S&P Pharmaceuticals ETF utilizes a representative sampling technique to track an index of pharmaceutical and life sciences companies. It maintains 62 holdings focused entirely on the healthcare sector. Its largest positions include Xeris Biopharma Holdings (NASDAQ:XERS) at 2.68%, Pacira Biosciences (NASDAQ:PCRX) at 2.60%, and Veradermics (NYSE:MANE) at 2.37%. This fund was launched in 2006. State Street SPDR S&P Pharmaceuticals ETF has paid $0.27 per share over the trailing 12 months, which on its recent ~$63.02 share price works out to a 0.4% yield.

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Which looks like the better buy

Pharmaceutical stocks have been on a tear recently, powered by GLP-1 drug breakthroughs, a busy FDA approval calendar, and a wave of M&A activity as large drugmakers race to replenish their pipelines. XPH has captured that momentum directly, delivering stronger trailing-12-month returns than PINK by riding a sectorwide rally in drug companies.

PINK is built around a wider definition of healthcare investing, with an active team making calls across pharmaceuticals, biotechnology, and health services rather than staying in one lane. That broader approach has produced steadier but more modest returns during a period when pharma specifically was leading the pack. And unique to this fund, it donates its entire management fee to Susan G. Komen cancer research, turning a routine investment cost into something more purposeful.

XPH charges less than PINK and has outperformed recently. For investors who want pure pharmaceutical exposure at a lower cost, XPH is the more direct bet. PINK is the better fit for those who want active, broader healthcare management and like the charitable mission built into the fund's structure.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.