Fidelity Health Care vs. State Street Biotech: Which ETF Fits Your Portfolio Best?
Key Points
The Fidelity MSCI Health Care Index ETF provides broad sector exposure at a lower cost than the State Street SPDR S&P Biotech ETF.
The SPDR ETF experienced a much deeper 54% maximum drawdown over the past five years compared to the Fidelity fund.
While the SPDR fund surged 89.3% over the last year, Fidelity's ETF offers a higher trailing dividend yield.
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The Fidelity MSCI Health Care Index ETF (NYSEMKT:FHLC) may appeal to cost-conscious investors seeking broad stability, whereas the State Street SPDR S&P Biotech ETF (NYSEMKT:XBI) targets growth through a narrow, higher-cost focus.
Healthcare is a pillar of the market, but investors must choose between broad stability and niche volatility. One fund targets high-reward biotech, while the other provides a diversified anchor across pharmaceuticals and services. This comparison evaluates how these different scopes affect cost and returns.
Snapshot (cost & size)
| Metric | XBI | FHLC |
|---|---|---|
| Issuer | SPDR | Fidelity |
| Share price (as of July 1, 2026) | $156.55 | $77.70 |
| Expense ratio | 0.35% | 0.08% |
| 1-yr return (as of July 1, 2026) | 89.3% | 21.8% |
| Dividend yield | 0.4% | 1.3% |
| Beta | 1.12 | 0.60 |
| AUM | $10.6 billion | $3 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Fidelity fund is notably more affordable. Investors seeking income may also prefer FHLC, as it offers a significantly higher payout than the biotech-heavy alternative.
Performance & risk comparison
| Metric | XBI | FHLC |
|---|---|---|
| Max drawdown (5 yr) | (54%) | (17.7%) |
| Growth of $1,000 over 5 years (total return) | ~$1,154 | ~$1,289 |
What's inside
The Fidelity ETF provides exposure to the entire U.S. healthcare sector, including pharmaceuticals, healthcare providers, and medical equipment companies. It holds 338 stocks, and its largest positions include Eli Lilly (NYSE:LLY) at 14%, Johnson & Johnson (NYSE:JNJ) at 8.95%, and AbbVie (NYSE:ABBV) at 6.5%. The fund was launched in 2013. The Fidelity ETF has paid $1.02 per share over the trailing 12 months, which on its recent ~$77.70 share price works out to a 1.3% yield.
The SPDR fund focuses exclusively on the biotechnology subsector using a modified equal-weighted approach. It holds 157 stocks, and its top holdings include Apogee Therapeutics (NASDAQ:APGE) at 1.5%, Moderna (NASDAQ:MRNA) at 1.48%, and Twist Bioscience (NASDAQ:TWST) at 1.41%. The fund was launched in 2006. The SPDR ETF has paid $0.57 per share over the trailing 12 months, which on its recent ~$156.55 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
Broadly speaking, the Fidelity ETF will likely appeal more to conservative investors. It holds more stocks so it's more diversified, it has a lower expense ratio, and it has a lower recent maximum drawdown. The fund also pays a modest dividend. The only thing I would point out is that while FHLC holds more stocks, its top 10 holdings account for about half of the portfolio's value, so there is some concentration risk here.
The SPDR fund is probably more suitable for aggressive investors. It has a strong one-year return, but its growth over the past five years is much less impressive, and it has a much higher maximum drawdown compared to FHLC. (Biotech specifically is riskier than healthcare as a whole, so that tracks.) Furthermore, it has a higher expense ratio.
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Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Eli Lilly, Moderna, and Twist Bioscience. The Motley Fool recommends Johnson & Johnson and SPDR S&P Biotech ETF. The Motley Fool has a disclosure policy.
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