Fidelity vs VanEck Healthcare ETFs: Broad Exposure or Pharma Focus

The Fidelity MSCI Health Care Index ETF (FHLC) provides low-cost exposure to the entire healthcare sector, while the VanEck Pharmaceutical ETF (PPH) concentrates on global pharmaceutical giants. Investors must decide between industry breadth and narrow specialization. The Fidelity fund captures diverse medical elements like equipment and services, while the VanEck fund focuses on the world's largest drug manufacturers.

Both funds act as defensive anchors for an equity portfolio but differ in construction and investment returns. The Fidelity fund has a lower expense ratio of 0.08% compared to the VanEck fund's 0.36%. The VanEck fund offers a higher dividend yield of 0.7 percentage points over the broader Fidelity healthcare index. FHLC invests in 365 holdings, with top positions including Eli Lilly & Co, Johnson & Johnson, and Abbvie Inc. PPH manages a basket of 26 holdings, focusing on Eli Lilly & Co, Merck & Co, and Novartis AG.

Over 3, 5, and 10 years, PPH has returned an annualized 14.4%, 10.2%, and 8%, compared to FHLC's 8.9%, 5.1%, and 9.9%. The VanEck Pharmaceutical ETF is recommended for recent years' strong performance.