🤝 BFF Take
VHT Wins on Breadth — XLV Is Fine for Pure Large-Cap Healthcare
XLV (Health Care Select Sector SPDR) and VHT (Vanguard Health Care ETF) are the two dominant low-cost US healthcare ETFs. XLV tracks the S&P 500 healthcare sector — only the 64 largest US healthcare companies. VHT tracks the broader MSCI US Investable Market Health Care Index with ~430 companies including mid and small-cap healthcare. Both are cheap: XLV at 0.09%, VHT at 0.10%. Top holdings are nearly identical — UnitedHealth, Eli Lilly, Johnson & Johnson, AbbVie, Merck dominate both. VHT's edge is broader diversification including mid-cap biotech and specialty pharmaceutical companies not in the S&P 500. XLV's edge is slightly more liquidity and options market depth. For long-term investors, VHT's additional breadth at essentially the same cost makes it the slight favorite.
📋 Quick Takeaways
🏥XLV holds 64 S&P 500 healthcare stocks; VHT holds ~430 — broader mid and small-cap coverage
💰XLV costs 0.09%; VHT costs 0.10% — effectively the same fee; both excellent for cost-conscious investors
📊Top holdings are nearly identical — UNH, LLY, JNJ, ABBV dominate both; difference is in smaller names
📊 Data-Based Take: VHT has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
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Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
XLV
Health Care Select Sector SPDR Fund
VHT
Vanguard Health Care ETF
📋 XLV vs VHT — Key Facts Side by Side
| Metric |
XLV |
VHT |
| Fund Name |
Health Care Select Sector SPDR Fund |
Vanguard Health Care ETF |
| Issuer |
State Street |
Vanguard |
| Tracks Index |
Health Care Select Sector Index |
MSCI US IMI Health Care 25/50 |
| Expense Ratio |
0.09% ✓ |
0.10% |
| Cost per $10K/yr |
$9.00 |
$10.00 |
| AUM |
$38B |
$18B |
| Holdings |
64 |
430 |
| Inception |
1998 |
2004 |
| 1-Year Return |
+4.80% |
+5.20% |
| 3-Year Return |
+4.20% |
+4.60% |
| 5-Year Return |
+8.60% |
+8.40% |
| Avg Bid-Ask Spread |
0.00% |
0.01% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 XLV vs VHT — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy XLV or VHT?
Choose if...
XLV
- You want the lowest fees — saves ~$1/yr per $10K vs VHT
- You already use State Street and prefer staying within their fund family
Choose if...
VHT
- You want broader diversification (430 holdings vs 64)
- You already use Vanguard and prefer staying within their fund family
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❓ XLV vs VHT — Frequently Asked Questions
Is XLV or VHT a better investment?
Both are excellent healthcare ETFs at nearly identical costs. VHT has an edge in breadth — 430 holdings vs XLV's 64 gives more exposure to mid-cap biotech and specialty pharma. XLV is limited to S&P 500 companies only, which excludes many interesting smaller healthcare innovators. For a buy-and-hold healthcare allocation, VHT's broader index is slightly more complete, though the performance difference over time has been minimal.
Why is healthcare a defensive sector?
Healthcare is considered defensive because demand for medical services, drugs, and devices is relatively inelastic — people need healthcare regardless of economic conditions. Healthcare ETFs tend to hold up better in recessions than cyclical sectors like technology or consumer discretionary. However, healthcare is not immune to headwinds: drug pricing legislation, Medicare/Medicaid reimbursement changes, and biotech clinical trial failures can all cause significant sector volatility.
What are the biggest healthcare companies in XLV and VHT?
Both funds are dominated by the same mega-caps: UnitedHealth Group (health insurance), Eli Lilly (GLP-1 drugs/diabetes/obesity), Johnson & Johnson (pharma/medtech), AbbVie (Humira/Skyrizi), Merck (Keytruda cancer drug), and Pfizer. These 6 companies typically make up 40-50% of XLV. In VHT, their weight is slightly lower due to the larger denominator of 430 stocks.
Does the GLP-1/obesity drug trend affect XLV and VHT?
Yes — significantly. Eli Lilly (Mounjaro/Zepbound) and Novo Nordisk (Ozempic/Wegovy) have become major holdings in healthcare ETFs due to the GLP-1 obesity drug boom. Eli Lilly alone has grown to be one of the largest weights in both XLV and VHT. The success of GLP-1 drugs is a major tailwind for healthcare ETFs, though it also introduces concentration risk around one drug class.
How do XLV and VHT compare to XBI for healthcare exposure?
XLV and VHT are broad healthcare sector ETFs including pharma, insurance, medtech, and biotech. XBI is a pure-play biotech ETF using equal weighting across small and mid-cap clinical-stage companies. XBI has much higher volatility and sensitivity to FDA decisions and clinical trial results. XLV/VHT provide stable healthcare diversification; XBI is an aggressive biotech bet within the sector.
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ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.