Two popular healthcare exchange-traded funds—State Street Health Care Select Sector SPDR and iShares U.S. Healthcare—offer similar exposure to large U.S. healthcare names, but investors are weighing a clearer trade-off: lower ongoing costs and slightly different income characteristics versus broader stock coverage.
According to fund data cited in the article, the State Street fund charges an expense ratio of 0.08% versus 0.38% for the iShares option, while the State Street vehicle also shows a higher trailing-12-month dividend yield (1.70% versus 1.20%). The holdings overlap meaningfully, including Eli Lilly, Johnson & Johnson and AbbVie, but their portfolio sizes differ—60 large-cap names for State Street versus 102 stocks for iShares—potentially affecting how concentrated the bet is within the sector.
Key takeaways
- Cost advantage: State Street Health Care Select Sector SPDR’s expense ratio is 0.08% compared with 0.38% for iShares U.S. Healthcare.
- Income edge: The State Street fund’s trailing-12-month dividend yield is 1.70% versus 1.20% for iShares.
- Different concentration: State Street focuses on 60 large-cap healthcare names, while iShares holds 102 stocks.
- Performance profile: Both funds delivered similar results over the trailing 12 months, with the article citing total returns of 15.60% for State Street and 15.30% for iShares (as of June 8, 2026).
- Investor implication: For long-term holders, lower fees and higher yield may favor the State Street ETF, while investors wanting broader diversification may lean toward iShares.
What the cost and yield comparison says
For investors selecting between healthcare sector ETFs, fees and dividend yield often drive the long-run outcome—particularly when the funds hold broadly overlapping business exposures. According to the figures presented in the article, the State Street Health Care Select Sector SPDR Trust has a materially lower expense ratio at 0.08%, compared with 0.38% for the iShares U.S. Healthcare ETF.
The yield figures in the article also point in State Street’s favor for income-focused allocations. It reports a trailing-12-month distribution yield of 1.70% for State Street versus 1.20% for iShares. The article frames this as more income per dollar invested for the State Street option, while both remain positioned as pure-play healthcare sector funds.
Holdings overlap—and where the funds differ
Both ETFs provide concentrated exposure to the U.S. healthcare sector, including large pharma and healthcare services/technology leaders. The article notes shared top holdings such as Eli Lilly and Co., Johnson & Johnson, and AbbVie, indicating that for many investors, the performance drivers are likely to overlap.
However, the funds diverge in portfolio breadth and concentration:
- State Street: 60 large-cap names selected from the S&P 500, with the largest position in Eli Lilly at 16.52%, followed by Johnson & Johnson at 10.15% and AbbVie at 7.15% (according to the article).
- iShares: 102 stocks, which the article characterizes as offering slightly broader diversification across market capitalizations. Its top positions include Eli Lilly at 16.17%, Johnson & Johnson at 9.81% and AbbVie at 6.94% (as reported in the article).
The portfolio construction differences may matter for investors concerned about single-stock risk. With fewer holdings, the State Street fund could be more sensitive to moves in its largest constituents, while the iShares fund may smooth results somewhat through greater breadth.
Performance and risk metrics from the article
Beyond fees, the article provides a limited set of comparative performance and risk statistics. It cites trailing-12-month total returns of 15.60% for the State Street fund and 15.30% for the iShares fund, using an “as of June 8, 2026” reference point. It also reports similar beta levels for both ETFs—0.57 for State Street and 0.58 for iShares—suggesting healthcare sector movement in recent history has been somewhat less volatile than the broader market, based on the methodology described in the article.
On downside behavior, the article lists maximum drawdowns over five years of (17.10%) for the State Street fund and (17.90%) for the iShares fund. It also states that an initial $1,000 investment would have grown to $1,342 for State Street and $1,273 for iShares over five years, based on total returns presented in the article.
Bigger picture: how to choose between the two
According to the article, the State Street Health Care Select Sector SPDR is designed as an affordable, long-running sector vehicle with lower fees and a higher indicated income rate. The piece also describes the fund as having a longer operating history (launched in 1998) and a healthcare-only portfolio structure. For investors prioritizing cost efficiency, fee drag can be a key differentiator over time.
Meanwhile, the iShares U.S. Healthcare ETF is positioned as a similarly healthcare-focused option but with a larger number of holdings (102 stocks) and higher expense ratio. For investors who want more diversification within the healthcare sector—particularly across a wider range of company sizes—the broader basket may better match their preferences, even if the ongoing fee is higher.
Investors weighing the two ETFs may want to monitor trailing yields and fee impacts as distributions and net asset values change over time, along with broader drivers for healthcare stocks such as interest-rate expectations and sector-specific developments that can affect large constituents like pharma leaders. The next practical catalysts to watch are the healthcare sector’s earnings cadence and any macro data or Federal Reserve messaging that influences discount rates for equity valuations.
