OppHub America Desk · · Source: yahoo-sector-etfs
Health Care ETFs: XLV vs. VHT Sector Battle
* Investors seeking sector-specific exposure could favor for its slightly higher historical returns and concentration in large-cap healthcare names. * Those preferring broader diversification, including mid- and small-cap exposure within healthcare, might find a more suitable option.
Based on reporting from yahoo-sector-etfs.
Investors evaluating health care sector exposure face a choice between the concentrated holdings of State Street's XLV and the broader diversification of Vanguard's VHT. The sector itself has seen significant gains, up around 30% in the past year, presenting continued interest for portfolio allocation. XLV offers a more focused approach, allocating approximately 60% of its assets to its top 10 holdings, whereas VHT provides wider reach with 52% in its top 10, including more small- and mid-cap companies. Both ETFs present distinct risk and return profiles for the U.S. investor.
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The Health Care Select Sector SPDR Fund (XLV) and Vanguard Health Care ETF (VHT) offer U.S. investors distinct avenues for gaining exposure to the healthcare sector, which has experienced substantial growth, rising approximately 30% over the past 52 weeks. Investors must weigh the concentrated nature of XLV against the broader diversification offered by VHT.
XLV, with an expense ratio of 0.08%, allocates about 60% of its assets to its top 10 holdings, emphasizing large-cap stocks (78%). Its top constituents include Eli Lilly & Co. (NYSE: LLY) at 15.5%, Johnson & Johnson (NYSE: JNJ) at 10.5%, and AbbVie Inc. (NYSE: ABBV) at 7.8%.
VHT, featuring an expense ratio of 0.09%, holds approximately 423 stocks, allocating 52% to its top 10. This ETF includes a greater proportion of mid-cap (22%) and small-cap (12%) companies. Its leading holdings comprise LLY at 14.2%, JNJ at 8.9%, and ABBV at 6.6%.
Over the past five years, VHT has delivered an annualized return of 5.1%, while XLV has returned 5.9%, with XLV outperforming VHT over the past year. Both ETFs provide a 1.5% dividend yield, with XLV holding a beta of 0.55 compared to VHT's 0.59.
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Based on reporting from yahoo-sector-etfs.
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