Which Healthcare ETF Is the Better Buy: iShares' Global IXJ or First Trust's Biotech FBT?
2026-07-21 18:12
•Sara Appino •The Motley Fool
••• ••••• Axe Capital view
Picking Between IXJ and FBT for Healthcare Exposure
IXJ offers broad, steady pharma exposure; FBT targets risky biotech growth.
For South African investors looking to add healthcare to their JSE portfolios via global ETFs, the choice isn’t straightforward. IXJ is the safer bet, featuring over 100 established pharma names like Eli Lilly, Johnson & Johnson, and AbbVie. It has a lower cost and steadier performance, which suits investors wary of volatility. FBT, meanwhile, homes in on 30 biotech firms that could deliver big breakthroughs and returns, but at the cost of significant price swings and higher fees. Given the rand’s usual sensitivity to global risk-off moves, stabilization favors IXJ’s defensive nature. Still, if you want to chase alpha and can stomach bumps, FBT might be tempting. Watch out, though: biotech breakthroughs are often binary – a failed drug trial can wipe out gains quickly. So, while IXJ feels right for most local investors, FBT deserves attention if your risk budget allows. this is just my opinion and not financial advice
Buy IXJ for core healthcare exposure with a defensive tilt. Consider a small, carefully sized position in FBT if you want biotech upside but expect swings.
- IXJ
- FBT
- USD/ZAR
- Biotech clinical trial failures hitting FBT
- Rand volatility amplifying ETF price moves
7/10
iShares Global Healthcare ETF (IXJ) offers broad diversification across 110 global healthcare companies with a lower 0.40% expense ratio, while First Trust NYSE Arca Biotechnology Index Fund (FBT) concentrates on 30 biotech companies with higher growth potential but greater volatility. IXJ suits defensive investors seeking stable exposure to established pharma giants, while FBT appeals to those betting on biotech breakthroughs despite higher risk.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Sara Appino
Categories: Equities, Earnings, Healthcare
Tickers: IXJ, FBT, LLY, JNJ, ABBV
Sentiment: Positive - Lower expense ratio (0.40%), broader diversification across 110 companies, more stable with lower maximum drawdown (18.10%), and anchored by established leaders like Eli Lilly, Johnson & Johnson, and AbbVie. Recommended for defensive healthcare exposure. Higher 1-year returns (51.60% vs 18.30%), concentrated equal-weight approach across 30 biotech companies with potential for outsized gains from breakthrough drugs. However, higher expense ratio (0.55%) and significantly larger maximum drawdown (29.90%) indicate higher risk.
Keywords: healthcare ETF, biotechnology, diversification, expense ratio, volatility, clinical trials, pharmaceutical
Insights:
- IXJ: Positive: Lower expense ratio (0.40%), broader diversification across 110 companies, more stable with lower maximum drawdown (18.10%), and anchored by established leaders like Eli Lilly, Johnson & Johnson, and AbbVie. Recommended for defensive healthcare exposure.
- FBT: Positive: Higher 1-year returns (51.60% vs 18.30%), concentrated equal-weight approach across 30 biotech companies with potential for outsized gains from breakthrough drugs. However, higher expense ratio (0.55%) and significantly larger maximum drawdown (29.90%) indicate higher risk.
- LLY: Positive: Largest holding in IXJ at 10.66%, representing established pharmaceutical giant with decades of revenue history and dominant market position.