Simplify's PINK or iShares' IYH: Which Healthcare ETF Should Long-Term Investors Choose Right Now?

Comparing Simplify Health Care ETF (NYSEMKT:PINK) and iShares U.S. Healthcare ETF (NYSEMKT:IYH) reveals a trade-off between an actively managed fund supporting charitable causes and a lower-cost index fund tracking mature market leaders.

Both ETFs provide exposure to the expansive healthcare sector but differ significantly in strategy and cost. The iShares fund offers passive exposure to established American companies, while the Simplify fund targets innovation through active management and donates all net profits to the Susan G. Komen foundation.

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 iShares fund is more affordable with a 0.38% expense ratio compared to 0.51% for the Simplify fund. Additionally, the iShares fund provides a higher payout, offering a 1.1% yield versus 0.6% for its peer, resulting in a 0.51 percentage point yield advantage.

Performance & risk comparison

What's inside

iShares U.S. Healthcare ETF tracks a benchmark of American healthcare companies, holding 100 positions. Its sector allocation is heavily concentrated with 99% in healthcare and 1% in technology. Its largest positions include Eli Lilly (NYSE:LLY) at 15.23%, Johnson & Johnson (NYSE:JNJ) at 10.05%, and AbbVie (NYSE:ABBV) at 7.01%. The fund was launched in 2000. iShares U.S. Healthcare ETF has paid $0.80 per share over the trailing 12 months, which on its recent ~$71.14 share price works out to a 1.1% yield.

The Simplify Health Care ETF actively targets capital appreciation through healthcare innovation, holding 58 stocks. Its sector weights include healthcare at 87%, industrials at 7%, and consumer cyclicals at 5%. Top holdings include Eli Lilly at 10.15%, Thermo Fisher Scientific (NYSE:TMO) at 7.07%, and PureCycle Technologies (NASDAQ:PCT) at 6.61%. The fund was launched in 2021. It also incorporates a currency hedge and donates all net profits to charity. Simplify Health Care ETF has paid $0.25 per share over the trailing 12 months, which on its recent ~$40.41 share price works out to a 0.6% yield.

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Which looks like the better buy

Healthcare investing rarely comes with a social dimension built in, but PINK is an interesting exception. Its active management team makes concentrated bets on medical innovation while directing a portion of proceeds to cancer research, an unusual combination that has resonated with a growing number of values-driven investors. And that mission has been matched by performance: PINK has delivered extraordinary returns in recent periods, outpacing the broader healthcare sector by a wide margin.

IYH has tracked the U.S. healthcare market passively for more than 25 years, holding around 100 companies across pharmaceuticals, biotechnology, health services, and medical equipment. That long track record and significantly larger asset base reflect decades of investor trust. This fund has survived multiple market cycles without changing course.

Although the fee difference between them is small, PINK's active management still carries a cost premium that it needs to consistently justify through better returns. For most long-term investors, IYH's proven passive approach, lower cost, and institutional scale make it the stronger foundation. If you’re intrigued by healthcare management paired with a charitable mission, PINK is the fund for you. Just make sure you are comfortable with the higher fees and concentration that come with it.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Eli Lilly, and Thermo Fisher Scientific. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.