State Street XLV vs VanEck BBH: Which Healthcare ETF Is the Better Buy in 2026?
Key Points
State Street Health Care Select Sector SPDR ETF offers a significantly lower expense ratio than VanEck Biotech ETF
VanEck Biotech ETF focuses exclusively on 25 biotechnology stocks while State Street Health Care Select Sector SPDR ETF holds 60 diverse healthcare names
State Street Health Care Select Sector SPDR ETF has demonstrated higher risk-adjusted growth and a smaller maximum drawdown over the last five years
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The State Street Health Care Select Sector SPDR ETF (NYSEMKT:XLV) offers broad-sector exposure with a lower cost, while VanEck Biotech ETF (NASDAQ:BBH) provides targeted, concentrated access to biotechnology leaders.
Both funds serve as foundational tools for capturing growth in the medical space, but operate with different levels of specificity. The State Street Health Care Select Sector SPDR ETF represents the broad healthcare landscape within the S&P 500, while the VanEck Biotech ETF targets companies specializing in genetic research and diagnostic technologies.
Snapshot (cost & size)
| Metric | BBH | XLV |
|---|---|---|
| Issuer | VanEck | SPDR |
| Share price | $208.01 (as of 2026-07-30) | $163.52 (as of 2026-07-30) |
| Expense ratio | 0.35% | 0.08% |
| 1-yr return (as of 2026-07-30) | 27.7% | 24.0% |
| Dividend yield | 0.5% | 1.6% |
| Beta | 0.68 | 0.55 |
| AUM | $406.1 million | $42.7 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 as of the close of trading on July 30.
Cost-conscious investors may find the State Street Health Care Select Sector SPDR ETF more appealing, as its 0.08% expense ratio is a fraction of the 0.35% charged by the VanEck Biotech ETF. Beyond management fees, the SPDR fund also provides a substantially higher dividend payout for income-seeking portfolios.
Performance & risk comparison
| Metric | BBH | XLV |
|---|---|---|
| Max drawdown (5 yr) | (39.9%) | (17.1%) |
| Growth of $1,000 over 5 years (total return) | $1,029 | $1,342 |
What's inside
The State Street Health Care Select Sector SPDR ETF tracks the Healthcare Select Sector Index, providing a balanced mix of pharmaceuticals, healthcare providers, and life sciences companies. It holds 60 stocks, and its largest positions include Eli Lilly and Co (NYSE:LLY) at 16.5%, Johnson and Johnson (NYSE:JNJ) at 10.6%, and Abbvie Inc (NYSE:ABBV) at 7.7%. The fund was launched in 1998. State Street Health Care Select Sector SPDR ETF has paid $2.50 per share over the trailing 12 months, which on its recent ~$163.5 share price works out to a 1.6% yield.
By contrast, the VanEck Biotech ETF follows the MVIS U.S. Listed Biotech 25 Index, focusing narrowly on companies that derive revenue from genetic-based medications. Its top positions include Amgen Inc (NASDAQ:AMGN) at 15.1%, Gilead Sciences Inc (NASDAQ:GILD) at 12.8%, and Vertex Pharmaceuticals Inc (NASDAQ:VRTX) at 9.1%. With only 24 holdings, it is far more concentrated than its State Street peer. The fund was launched in 2011. VanEck Biotech ETF has paid $0.96 per share over the trailing 12 months, which on its recent ~$208.0 share price works out to a 0.4% yield.
Which fund is the better buy?
Few sectors are moving as fast as healthcare right now.
Both ETFs provide good exposure ot the sector and have some similarities beyond their healthcare focus. For one, both funds are heavily concentrated in their top 10 holdings, with the State Street fund, XLV, allocating about 60% of its assets to its top 10 holdings, while the VanEck fund, BBH, allocates over three-quarters of its assets to its top 10 holdings.
There are some key differences to take into account, too. XLV, anchored by Eli Lilly, Johnson & Johnson, and AbbVie, captures healthcare's defensive characteristics alongside its long-term growth potential. When markets turn turbulent, investors historically rotate into exactly these kinds of companies. It’s heavily in large-cap stocks, with 77% of its assets in large caps, 21% in mid caps, and just 2% in small caps. BBH is much more interested in mid cap stocks, allocating 53% of its strategy to those stocks, 8% tpo small caps, and 39% to large caps, mostly value stocks.
In recent years, the concentrated focus of BBH has paid off for its investors. The fund has returned an annualized 9.1% over the past three years and is also up 8.6%, year to date. That beats XLV’s 8.4% 3-year return and its 5.9% ytd gain.
Longer-term, however, XLV’s more defensive characteristics have proven its mettle. XLV has returned an annualized 5.9% and 9.8% return over its 5-year and 10-year look-back, respectively. BBH, by comparison, has given investors a weaker 0.3% and 6.4% over the 5- and 10-year periods.
Both these funds are good choices. BBH is benefiting in part from the market rotation toward small and mid cap stocks. Its concentrated focus with just two dozen stocks brings more risk, however, as seen by its maximum drawdown. For long-term investors in healthcare, XLV is the ETF to choose.
For more guidance on ETF investing, check out the full guide at this link.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Amgen, Eli Lilly, Gilead Sciences, and Vertex Pharmaceuticals. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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