Fidelity FHLC costs less than Invesco PBE for healthcare exposure

The Fidelity MSCI Health Care Index ETF (FHLC) charges an expense ratio of 0.08%, a fraction of the 0.59% fee levied by the Invesco Biotechnology & Genome ETF (PBE). This cost difference is central to the comparison between the two funds, which offer distinct levels of portfolio concentration and sector focus for investors seeking exposure to the healthcare industry.

FHLC provides broad exposure by tracking 365 holdings, with a 99% allocation to the healthcare sector and a 1% tilt toward technology. The fund, launched in 2013, encompasses pharmaceuticals, equipment, and services providers. Its largest positions include Eli Lilly & Co. at 12.94%, Johnson & Johnson at 8.72%, and AbbVie at 6.57%. FHLC manages $3.5 billion in assets under management and has paid $1.02 per share over the trailing 12 months, resulting in a dividend yield of 1.2% on its recent share price of approximately $81.29.

In contrast, PBE is a concentrated portfolio of 31 U.S.-based companies with a 100% weight in healthcare. Launched in 2005, the fund seeks to replicate the Dynamic Biotech & Genome Intellidex Index, utilizing a factor-based screen that evaluates momentum, earnings quality, and value. This approach distinguishes it from simple passive biotech trackers. Top holdings include Natera at 6.31%, Illumina at 6.29%, and Biogen at 5.16%. PBE manages $0.4 billion in assets and has paid $1.33 per share over the trailing 12 months, translating to a 1.4% yield on its recent share price of approximately $97.04.

The healthcare sector is currently generating significant investment attention due to record dealmaking, GLP-1 drug innovation, and ongoing biotech acquisitions. While this activity benefits both ETFs, it does so from different angles. FHLC offers diversification across nearly 400 companies, including pharmaceutical giants and medical device makers, tracked passively at a low cost. PBE focuses on a narrower selection of around 30 biotechnology and genomics companies, introducing more specific industry risk.

Investors must weigh the fee structure against potential returns. PBE charges more than seven times the expense ratio of FHLC, a premium that requires consistent outperformance to offset the higher cost relative to the cheaper alternative. For most long-term investors, FHLC’s broader diversification and lower cost may serve as a more dependable foundation. Conversely, PBE suits those willing to accept concentrated risk in exchange for a specialized approach to genetic research and biotech development.