Which Healthcare ETF Is the Better Buy: Fidelity's Broad FHLC or State Street's Pharma-Focused XPH?
Key Points
Fidelity MSCI Health Care Index ETF offers a lower expense ratio of 0.08% compared to the 0.35% charged by State Street SPDR S&P Pharmaceuticals ETF.
State Street SPDR S&P Pharmaceuticals ETF focuses specifically on the pharmaceutical industry, whereas Fidelity MSCI Health Care Index ETF tracks the broader healthcare sector.
Fidelity MSCI Health Care Index ETF has historically shown lower volatility and a smaller maximum drawdown than the more concentrated State Street SPDR S&P Pharmaceuticals ETF.
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The Fidelity MSCI Health Care Index ETF (NYSEMKT:FHLC) provides broad healthcare exposure at a fraction of the cost of the State Street SPDR S&P Pharmaceuticals ETF (NYSEMKT:XPH), which targets a specific industry niche.
Investors seeking healthcare exposure must choose between broad sector coverage and targeted industry plays. While both funds operate within the same universe, they vary significantly in cost, diversification, and recent momentum. This comparison breaks down how these two popular ETFs navigate the medical landscape.
Snapshot (cost & size)
| Metric | XPH | FHLC |
|---|---|---|
| Issuer | SPDR | Fidelity |
| Share price | $72.41 (as of 2026-08-27) | $83.48 (as of 2026-08-27) |
| Expense ratio | 0.35% | 0.08% |
| 1-yr return (as of 2026-08-27) | 54.0% | 29.2% |
| Dividend yield | 0.5% | 1.2% |
| Beta | 0.60 | 0.60 |
| AUM | $586.6 million | $3.3 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.
Cost-conscious investors may prefer the Fidelity fund, as its 0.08% expense ratio is significantly lower than the 0.35% charged by the SPDR fund. Additionally, the Fidelity fund offers a notably higher payout for income-focused portfolios.
Performance & risk comparison
| Metric | XPH | FHLC |
|---|---|---|
| Max drawdown (5 yr) | (30.9%) | (17.7%) |
| Growth of $1,000 over 5 years (total return) | $1,595 | $1,331 |
What's inside
Fidelity MSCI Health Care Index ETF tracks the broader healthcare sector, holding 365 positions. Its largest positions include Eli Lilly (NYSE:LLY) at 12.93%, Johnson & Johnson (NYSE:JNJ) at 8.81%, and Abbvie (NYSE:ABBV) at 6.30%. The fund was launched in 2013. It has paid $1.02 per share over the trailing 12 months, which on its recent ~$83.48 share price works out to a 1.2% yield.
State Street SPDR S&P Pharmaceuticals ETF is more concentrated, holding 65 positions specifically in the pharmaceutical industry. Its top holdings include Amylyx Pharmaceuticals (NASDAQ:AMLX) at 3.93%, Crinetics Pharmaceuticals (NASDAQ:CRNX) at 3.52%, and MBX Biosciences (NASDAQ:MBX) at 3.05%. The fund was launched in 2006. It has paid $0.34 per share over the trailing 12 months, which on its recent ~$72.41 share price works out to a 0.5% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Few sectors are moving as fast as healthcare right now. GLP-1 drugs continue reshaping metabolic medicine, biopharma M&A is running at its strongest pace in years, and the FDA approval calendar remains busy. Investors can access that momentum through either fund, but the portfolios behind them look nothing alike.
FHLC owns nearly 400 healthcare companies tracked passively at a rock-bottom cost, capturing the sector's full breadth without concentrating in any single corner. XPH narrows the focus entirely to pharmaceuticals, using a modified equal-weight approach that gives smaller drug companies the same portfolio influence as industry heavyweights. XPH's equal-weight design tilts the portfolio toward smaller, less proven drug makers, while costing more than four times as much.
For most long-term investors, FHLC's broader diversification, lower cost, and stronger historical performance make it the better buy. XPH is a good fit for those who see the pharmaceutical industry as the most attractive corner of healthcare and want a fund that owns nothing else.
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Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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