Fidelity Health Care ETF beats iShares Biotechnology ETF on cost and yield

Fidelity MSCI Health Care Index ETF (FHLC) offers a 0.08% expense ratio and a 1.2% trailing 12-month dividend yield, while iShares Biotechnology ETF (IBB) charges a 0.44% fee and provides a 0.2% yield. The comparison highlights a tradeoff between the broad, lower-cost exposure of FHLC and the concentrated, higher-volatility focus of IBB on the biotechnology sector.

FHLC seeks to track a broad index of healthcare companies, holding 365 positions with healthcare representing 99% of the fund. Its largest holdings are Eli Lilly & Co at 13.15%, Johnson & Johnson at 8.67%, and AbbVie at 6.76%. The fund was launched in 2013 and has paid $1.02 per share over the trailing 12 months on a recent share price of approximately $82.5.

IBB tracks an index of publicly traded U.S. biotechnology companies, with biotechnology accounting for 87% of the portfolio. The remaining holdings include Life Sciences Tools & Services at 9% and Pharmaceuticals at 3%. The fund, launched in 2001, holds 243 positions with top weights in Gilead Sciences at 8.36%, Amgen at 7.81%, and Vertex Pharmaceuticals at 7.58%. It has paid $0.34 per share over the trailing 12 months on a recent share price of approximately $206.5.

Although IBB has outperformed FHLC over the last year, FHLC’s total returns have increased significantly since its 2013 inception, while IBB’s have tripled over its longer history. Biotechnology often acts as a high-beta growth engine within healthcare, carrying distinct volatility risks that may not suit all investors. Conversely, FHLC’s concentration in Eli Lilly, Johnson & Johnson, and AbbVie means nearly 30% of its portfolio is tied to these three companies.

The choice between the two funds depends on an investor’s preference for broad healthcare exposure versus a specific biotech niche. FHLC is favored for its lower cost, higher dividend yield, lower volatility, and stronger historical returns since inception. IBB remains an option for investors specifically targeting the biotechnology sector.