In Healthcare ETFs, Is iShares Pharma a Better Buy Than VanEck Biotech?

Both the iShares U.S. Pharmaceuticals ETF (IHE) and VanEck Biotech ETF (BBH) provide targeted exposure to the healthcare sector, with IHE focusing on established pharmaceutical companies and BBH targeting high-growth biotechnology firms. While BBH has a slightly lower expense ratio of 0.35% compared to IHE's 0.37%, IHE offers a higher dividend yield of approximately 1.4% compared to BBH's 0.4%.

IHE's top 10 holdings include pharmaceutical giants such as Johnson & Johnson, Eli Lilly, and Bristol Myers Squibb, which contribute to its lower volatility profile. In contrast, BBH's narrower focus on biotechnology companies may lead to higher volatility but provides direct exposure to cutting-edge medical innovation. Over the past 3-, 5-, and 10-year periods, IHE has outperformed BBH in terms of annualized returns, with IHE generating 20.7%, 11.6%, and 8.6% respectively, while BBH returned 9%, 0.3%, and 6.4% respectively.

In conclusion, IHE is the better buy between the two healthcare-focused ETFs, offering a higher yield, lower volatility, and stronger performance over the long term.