Invesco Pharmaceuticals vs iShares Healthcare: Which Healthcare ETF Brings Better Profits

The Invesco Pharmaceuticals ETF (NYSEMKT:PJP) concentrates specifically on a narrow group of 27 pharmaceutical companies, while the iShares U.S. Healthcare ETF (NYSEMKT:IYH) provides broader sector exposure with 100 holdings and a lower expense ratio.

Healthcare is often viewed as a defensive sector, but it encompasses everything from mature dividend-paying giants to speculative biotechnology firms. Choosing between a specialized fund like the Invesco Pharmaceuticals ETF and a broad-market equivalent like the iShares U.S. Healthcare ETF involves weighing the benefits of concentration against the stability of diversification.

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 as of the end of trading on Aug. 27, 2026.

Cost is a primary differentiator. The iShares U.S. Healthcare ETF is more affordable with its 0.37% expense ratio, which is nearly 0.2 percentage points lower than the Invesco fund. For income-seekers, the iShares fund also provided a higher payout over the past year.

Performance & risk comparison

What's inside

The iShares U.S. Healthcare ETF offers exposure across the broad healthcare landscape, including sectors like medical equipment and biotechnology. Its largest positions include Eli Lilly & Co (NYSE:LLY) at 14.5%, Johnson & Johnson (NYSE:JNJ) at 10%, and Abbvie Inc (NYSE:ABBV) at 7.1%. The portfolio contains 100 holdings, and it was launched in 2000. This fund has paid $0.80 per share over the trailing 12 months, which, on its recent ~$72.63 share price, works out to a 1.1% yield.

In contrast, the Invesco Pharmaceuticals ETF is more concentrated, holding 27 stocks with a strict focus on companies involved in drug research and development. Its top holdings include Amgen Inc (NASDAQ:AMGN) at 5.7%, Abbott Laboratories (NYSE:ABT) at 5.7%, and Merck & Co (NYSE:MRK) at 5.5%. Because it focuses on a much smaller portfolio, it takes larger relative stakes in these individual drugmakers. Launched in 2005, this fund has paid $1.06 per share over the trailing 12 months, which on its recent ~$128.79 share price works out to a 0.8% yield.

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

Which looks like the better buy?

Both these ETFs offer exposure to the healthcare sector and are alike in many ways.

The similarities: Both funds are almost all (99%-plus) in U.S. stocks, both have the same 8 stocks in their top 10 holdings (although at different weightings) with roughly half of their assets dedicated to their top 10 -- 49% for PJP and 59% for IYH.

Still, they do have some differences investors should take into account when weighing whether to invest.

IYH, the fund with the larger set of component stocks, is quite weighted toward large caps, at 71% of the portfolio, with 24% in mid caps and 6% in small caps (numbers exceed 100% due to rounding).

By comparison, PJP is 45% large caps, 15% mid caps, and 40% in small caps. That makes PJP a more aggressive portfolio, since small caps should be more volatile, although the maximum 5-year drawdown, as noted in the table above, shows PJP is actually less volatile than its iShares rival.

Indeed, the structure or management -- or both -- of PJP appears to work quite well for investors, beating iShares' IYH ETF in most time periods. Year-to-date, for instance, PJP is up 16.4% to IYH's 14.5% return. Over the 3-year and 5-year periods, PJP wins out with annualized returns of 19.2% and 10.3%, respectively, compared to 10% and 5.5% for IYH. The iShares fund does have a better 10-year performance, at 10.5% vs. 8.1% annualized return.

While IYH is appealing for its better 10-year return, PJP's consistent outperformance since and its lighter maximum drawdown suggest PJP is the ETF to add to your portfolio.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, Amgen, Eli Lilly, and Merck. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.