Which Healthcare ETF Is the Better Buy: Fidelity’s FHLC or State Street’s XLV?

While Fidelity MSCI Health Care Index ETF (NYSEMKT:FHLC) provides broad-spectrum coverage of the U.S. healthcare market, State Street Health Care Select Sector SPDR ETF (NYSEMKT:XLV) offers a more concentrated approach by targeting S&P 500 constituents.

Both funds serve as low-cost vehicles for healthcare exposure, yet they differ significantly in depth and liquidity. The SPDR trust is a pillar of the sector with decades of history, while the Fidelity fund offers a more granular look at the industry by including hundreds of smaller companies.

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.

Investors will find price parity here, as both ETFs carry a 0.08% expense ratio. While costs are equal, the State Street trust offers a slightly higher 1.4% yield compared to the 1.2% payout from the Fidelity fund.

Performance & risk comparison

What's inside

State Street Health Care Select Sector SPDR ETF maintains a tight focus on large-cap stability, as its portfolio includes 61 holdings drawn from the S&P 500. Its sector allocation is 99% healthcare and 1% technology, and its largest positions include Eli Lilly (NYSE:LLY) at 15.59%, Johnson & Johnson (NYSE:JNJ) at 9.50%, and Abbvie (NYSE:ABBV) at 7.80%. It was launched in 1998. State Street Health Care Select Sector SPDR ETF has paid $2.55 per share over the trailing 12 months, which on its recent ~$177.2 share price works out to a 1.4% yield.

Fidelity MSCI Health Care Index ETF offers a much wider net, holding 365 different securities to track the MSCI USA IMI Health Care Index. It mirrors the sector weightings of its peer with 99% in healthcare and 1% in technology, but its top holdings are slightly less concentrated: Eli Lilly & Co at 13.20%, Johnson & Johnson at 8.34%, and Abbvie at 6.83%. It was launched in 2013. Fidelity MSCI Health Care Index ETF has paid $1.02 per share over the trailing 12 months, which on its recent ~$85.1 share price works out to a 1.2% yield.

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Which looks like the better buy

Healthcare has been one of the more interesting sectors to watch in 2026. GLP-1 drugs have redrawn the pharmaceutical landscape, biopharma dealmaking has surged, and biotech has delivered some of the market's most dramatic single-stock stories. Both FHLC and XLV have delivered positive returns through that environment, though neither has set the world on fire.

Here is the honest starting point for this comparison: Both funds charge identical fees. That removes the most common tiebreaker and forces a more interesting question: Does owning more of the healthcare market actually make a difference?

FHLC holds nearly five times as many companies as XLV, including smaller healthcare names that the S&P 500 excludes. In practice, those extra holdings have produced marginally better recent returns than XLV's large-cap-only approach, though the difference is slim. XLV has a 25-year track record and manages nearly 15 times the assets, giving it the deeper institutional trust and liquidity of the two.

For most long-term investors, both are excellent choices. Fidelity platform investors will reach for FHLC naturally. For everyone else, XLV's scale and history make it the more established home for a core healthcare allocation.

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.