FHLC charges 0.08% expenses vs. 0.57% for PJP. One fund holds 300+ stocks across healthcare; the other concentrates on 33 pharma names. Performance divergence favors PJP recently.
Fidelity MSCI Health Care Index ETF (FHLC) and Invesco Pharmaceuticals ETF (PJP) both sit in the healthcare sector. They are built for different portfolios. One is a broad, low-cost index fund. The other is a concentrated bet on drugmakers.
FHLC tracks over 300 healthcare stocks across pharmaceuticals, biotech, medical devices, and managed care. Its top holdings include Eli Lilly, Johnson & Johnson, and AbbVie. Launched in 2013, it has paid $1.02 per share in dividends over the trailing 12 months.
PJP holds just 33 securities, all in the pharmaceutical subsector. Its largest positions include Abbott Laboratories, Amgen, and AbbVie. The fund launched in 2005 and has paid $1.06 per share over the trailing 12 months.
Fees are the most clear-cut difference. PJP charges an expense ratio of 0.57%, or $57 per year for every $10,000 invested. FHLC charges 0.08%, or $8 per $10,000. Over a decade, that gap compounds into thousands of dollars in extra cost for a PJP holder with a large account balance.
FHLC also offers a higher dividend yield, though the difference is narrow. The broad fund yields more than the pharma-focused one, which is unusual given that drug stocks tend to pay reliable dividends.
Diversification is the second major split. Because PJP holds 33 stocks in a single subsector, a setback in drug pricing policy, patent cliff losses, or a failed clinical trial across a few large holdings can hit the fund hard. FHLC spreads the same risk across the entire healthcare value chain. If pharmaceuticals lag, the hospital and device exposure may offset some of the damage.
The concentrated approach has worked recently. PJP has outperformed FHLC on both one-year and five-year total returns. A targeted bet on pharma paid off when the sector benefited from strong drug sales and pricing power. The question is whether that outperformance will persist.
The right choice depends on the portfolio job. FHLC is the lower-cost, lower-risk option for an investor who wants healthcare exposure without betting on a single subsector. It fits a core allocation where fees and diversification matter more than sector alpha.
PJP makes sense for an investor who already has broad healthcare exposure and wants an overweight to pharmaceuticals, or someone who believes drug stocks will outperform devices, biotech, and managed care over the next cycle. The higher fee and lower diversification are the price of that conviction.
JNJ stock page is one of the largest positions in both funds, reflecting the overlap in their top holdings. The structural differences in cost, count, and coverage mean the two funds will behave differently through a full market cycle.
Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, Amgen, and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.