Decoding Healthcare ETFs: Different Sectors, Different Strategies
Key Points
While State Street SPDR S&P Biotech ETF delivered a higher 1-year total return, the Invesco fund has experienced significantly shallower drawdowns and stronger cumulative growth over the past five years.
The Invesco fund offers a slightly higher dividend yield, though the State Street fund remains the larger and more cost-efficient option for investors seeking targeted industry exposure.
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The Invesco S&P 500 Equal Weight Health Care ETF (NYSEMKT:RSPH) provides balanced exposure across the healthcare sector, while the State Street SPDR S&P Biotech ETF (NYSEMKT:XBI) offers concentrated, high-volatility access to biotechnology stocks.
Healthcare investors often choose between broad sector coverage and targeted industry plays. While both funds utilize modified weighting strategies to avoid top-heavy concentration, they offer very different risk-reward profiles. This comparison evaluates how RSPH's diversified, equal-weight approach compares with XBI's focused, high-growth potential.
Snapshot (cost & size)
| Metric | XBI | RSPH |
|---|---|---|
| Issuer | SPDR | Invesco |
| Share price | $149.54 (as of 2026-10-23) | $39.44 (as of 2026-10-23) |
| Expense ratio | 0.35% | 0.4% |
| 1-yr return (as of Oct. 23, 2026) | 39.6% | 28.9% |
| Dividend yield | 0.4% | 0.6% |
| Beta | 0.87 | 0.78 |
| AUM | $10.5B | $964.8M |
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 State Street fund is slightly more affordable with a 0.35% expense ratio, making it an efficient tool for traders seeking targeted biotech exposure. However, income-seeking investors may find the Invesco fund more appealing for long-term holdings, as its broader, equal-weighted sector approach yields a 0.2% yield advantage over its biotechnology-focused peer.
Performance & risk comparison
| Metric | XBI | RSPH |
|---|---|---|
| Max drawdown (5 yr) | (53.2%) | (21.9%) |
| Growth of $1,000 over 5 years (total return) | $1,212 | $1,333 |
What's inside
Invesco S&P 500 Equal Weight Healthcare ETF allocates its assets across the broader healthcare landscape, with 98% in healthcare and small exposures to technology. Its largest positions include Moderna (NASDAQ:MRNA) at 2.26%, Illumina (NASDAQ:ILMN) at 2.02%, and Mettler-Toledo International (NYSE:MTD) at 1.99%. The fund holds 61 stocks and tracks an equal-weighted index. It was launched in 2006. Invesco S&P 500 Equal Weight healthcare ETF has paid $0.22 per share over the trailing 12 months, which, on its recent ~$39.44 share price, works out to a 0.6% yield.
State Street SPDR S&P Biotech ETF is much more concentrated, with 99% of its portfolio in healthcare, specifically targeting the biotechnology industry. Top holdings include Moderna at 2.23%, Natera (NASDAQ:NTRA) at 1.85%, and Biogen (NASDAQ:BIIB) at 1.80%. It utilizes a representative sampling technique to hold 165 stocks. It was also launched in 2006. State Street SPDR S&P Biotech ETF has paid $0.54 per share over the trailing 12 months, which, on its recent ~$149.54 share price, works out to a 0.4% yield.
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Which looks like the better buy
When comparing the Invesco S&P 500 Equal Weight Healthcare ETF (RSPH) and the State Street SPDR S&P Biotech ETF (XBI), investors should consider several key factors. Let's see what they tell us about each fund.
First, we should examine each fund's strategy. RSPH provides broad healthcare exposure with a fair degree of stability. XBI, on the other hand, focuses on the biotech sector. It offers concentrated exposure and higher volatility.
Two other important factors are historical performance and income potential. Since 2021, RSPH has generated a total return of 37%, equating to a compound annual growth rate (CAGR) of 6.6%. XBI, by contrast, has delivered a total return of 14%, with a 2.6% CAGR. As for income, RSPH has a dividend yield of 0.56%, and XBI's is 0.35%. Neither yield is all that high, but RSPH gains a modest edge in the category.
One final factor to weigh is cost. RSPH has an annual expense ratio of 0.40%, while XBI's is 0.35%. For context, a person who invests $10,000 in each fund should expect to pay $40 in annual fees for their RSPH shares and $35 in annual fees for their XBI shares.
In summary, RSPH and XBI are both healthcare ETFs, but they target different sub-sectors and serve different purposes. RSPH is best for investors seeking broad healthcare sector exposure with a relatively low amount of volatility. XBI is better for those seeking biotech-specific exposure or those with a greater appetite for volatility.
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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Illumina, Moderna, and Natera. The Motley Fool recommends Biogen and SPDR Series Trust - SPDR S&P Biotech ETF. The Motley Fool has a disclosure policy.
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