XLV vs. IXJ: A Tale of Two Healthcare ETFs with Different Approaches

The State Street Health Care Select Sector SPDR ETF (XLV) and the iShares Global Healthcare ETF (IXJ) are two popular healthcare-focused exchange-traded funds (ETFs). They offer different geographic scopes and entry prices, making them a trade-off between domestic efficiency and global breadth.

XLV has a low expense ratio of 0.08%, significantly lower than IXJ's 0.38%. XLV also offers a more concentrated portfolio with just 60 stocks from the healthcare segment of the S&P 500, compared to IXJ's 110 global equities. The largest holdings in both ETFs are similar, but XLV has slightly larger concentrations.

IXJ provides broader exposure by tracking global equities, including pharmaceutical, biotech, and medical device companies. Its top three holdings are Eli Lilly (LLY), Johnson & Johnson (JNJ), and AbbVie (ABBV). In contrast, XLV offers a more targeted approach with a focus on U.S.-based healthcare stocks.

When it comes to performance, XLV has outperformed IXJ in both one- and five-year total returns. However, fees are another factor to consider. IXJ charges $38 per year in fees for every $10,000 invested, while XLV charges just $8 per year.