XLV vs FHLC: Which Healthcare ETF Fits Your Portfolio?
2026-07-27 12:35
•Jake Lerch •The Motley Fool
•••• ••••• Axe Capital view
XLV vs FHLC: Picking the Right Healthcare ETF
Choosing between XLV and FHLC boils down to liquidity, dividend needs, and diversification preferences.
South African investors seeking healthcare exposure face a choice between XLV and FHLC, both U.S.-listed ETFs with low fees but different profiles. XLV's strength lies in its large asset base and liquidity, making it easy to trade here through international brokers, and it throws off a better dividend yield—1.6% compared to FHLC’s 1.3%. Its focus on 60 mega-cap giants like Johnson & Johnson and Lilly offers stability and income, which might appeal more during uncertain rand and global markets. FHLC, with its 365 holdings, offers broader diversification including smaller names, slightly edging XLV over a decade in returns, but comes with lower yield and less liquidity, which can translate to wider spreads and higher trading costs locally. Given the rand’s volatility against the dollar, and limited direct healthcare plays on the JSE, layering a liquid, stable U.S. ETF like XLV seems more pragmatic for now. This view may falter if mid-and small-cap healthcare names gain rapid momentum—something FHLC is better positioned to capture. this is just my opinion and not financial advice
Buy XLV for better liquidity and dividend income; keep FHLC on watch if you want broader, riskier exposure to the healthcare sector.
- XLV
- FHLC
- USD/ZAR
- Rand weakness increasing dollar cost impact
- Mid-cap healthcare boom favouring FHLC
7/10
The State Street Health Care Select Sector SPDR ETF (XLV) and Fidelity MSCI Health Care Index ETF (FHLC) both offer low-cost healthcare exposure with identical 0.08% expense ratios. XLV focuses on 60 mega-cap healthcare stocks and has delivered stronger 5-year returns ($1,332 vs $1,276 on $1,000 invested), higher dividend yield (1.60% vs 1.30%), and greater liquidity with $41.7B in AUM. FHLC provides broader diversification with 365 holdings including mid and small-cap stocks. Over 10 years, both underperformed the S&P 500 significantly, with XLV returning 157% (9.9% CAGR) and FHLC returning 159% (10.0% CAGR) versus the S&P 500's 301% (14.9% CAGR).
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Jake Lerch
Categories: Rates, Equities, Capital Returns, Healthcare
Tickers: XLV, FHLC, LLY, JNJ, ABBV
Sentiment: Positive - XLV demonstrates superior 5-year performance, higher dividend yield (1.60%), significantly larger AUM ($41.7B) providing better liquidity, and a longer track record (since 1998). Better suited for income-seeking investors. FHLC offers broader diversification with 365 holdings and slightly outperformed XLV over 10 years (10.0% vs 9.9% CAGR), but has lower dividend yield, smaller AUM, and shorter track record. Suitable for investors seeking exposure beyond mega-cap stocks.
Keywords: healthcare ETF, mega-cap stocks, diversification, dividend yield, expense ratio, defensive sector, liquidity
Insights:
- XLV: Positive: XLV demonstrates superior 5-year performance, higher dividend yield (1.60%), significantly larger AUM ($41.7B) providing better liquidity, and a longer track record (since 1998). Better suited for income-seeking investors.
- FHLC: Neutral: FHLC offers broader diversification with 365 holdings and slightly outperformed XLV over 10 years (10.0% vs 9.9% CAGR), but has lower dividend yield, smaller AUM, and shorter track record. Suitable for investors seeking exposure beyond mega-cap stocks.
- LLY: Neutral: Largest holding in both funds (13.84% in FHLC, 16.11% in XLV), representing significant concentration in mega-cap healthcare exposure.