XLV vs VHT: Healthcare ETF Comparison
XLV vs VHT: Overview
Both XLV, managed by State Street, and VHT, managed by Vanguard, are passively managed funds. They aim to provide exposure to a broad array of healthcare stocks.
XLV tracks the Health Care Select Sector Index, concentrating specifically on healthcare stocks from the S&P 500, whereas VHT seeks to imitate the MSCI US Investable Market Health Care 25/50 Index performance, capturing a broad spectrum of healthcare stocks across the full market cap range.
Thus, the core difference lies in the size and range of their exposures.
XLV vs VHT: Expense Ratio
XLV and VHT have the same expense ratio of 0.10%. Therefore, the expense ratio is not a significant factor to consider when comparing these healthcare funds.
XLV vs VHT: Dividend Yield
Dividend yield is another critical consideration. XLV has a dividend yield of approximately 1.53%, while VHT maintains a slightly higher yield of 1.57%.
While this change may be small, it seems that since VHT holds many more stocks, the dividend may be higher and more stable.
XLV vs VHT: Holdings
While both funds allow diversified exposure across the healthcare landscape, notable differences exist in their holdings. XLV’s portfolio is concentrated around 64 large-cap stocks from the S&P 500 index, making it less diverse but potentially more focused.
In contrast, VHT’s attempts to encompass the whole US healthcare industry, offering a more extensive range of company sizes and sub-sectors, such as healthcare equipment and services, pharmaceuticals, biotechnology, life sciences, and more.
Additionally, VHT holds over 400 stocks, which is significantly more than XLV. Hence, VHT could be viewed as providing broader exposure to the healthcare industry.
XLV vs VHT: Performance Comparison
Quantifying the performance difference between XLV and VHT can be challenging as it tends to fluctuate based on variations in market conditions.
XLV’s large-cap focus tends to deliver stability during economic downturns, as large firms can generally navigate through volatile periods better. On the other hand, VHT’s broader market approach, encompassing stocks across the full market cap spectrum, might outshine during a robust economic climate as smaller, faster-growing firms can provide increased returns.
XLV vs VHT: Which is Better For You?
Ultimately, choosing between XLV and VHT hinges heavily on your individual investment objectives, risk tolerance, and sector preference. Investors seeking focused exposure to large-cap healthcare stocks within the S&P 500 may lean towards XLV, while those preferring a more diversified exposure across the whole health industry may sway towards VHT.
Similarly, risk-averse investors may prefer the relative stability of XLV, while those comfortable with greater volatility for potentially higher returns might prefer VHT’s broader market approach.
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