Quick Read
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FHLC holds 337 positions versus XLV's 65, giving retirees exposure to small biotechs before they grow large enough to join the S&P 500.
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Eli Lilly and Johnson & Johnson account for 27% of XLV but only 22% of FHLC, so a bad quarter from either stock hurts XLV more.
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Despite FHLC's broader reach, XLV outperformed across every period measured, with the widest gap over five years: 49% versus 42%.
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Retirees who want health care in their portfolio usually start with the Health Care Select Sector SPDR ETF( NYSEARCA:XLV ). It's the giant of the category, with $43.62 billion in assets in flow data from October 14, 2026. In that same report, the Fidelity MSCI Health Care Index ETF( NYSEARCA:FHLC ) held $3.60 billion. That makes Fidelity's fund far smaller, even though it owns far more of the health care sector.
FHLC Owns Five Times as Many Health Care Companies
XLV tracks the Health Care Select Sector Index, which only includes the health care companies in the S&P 500. Its regulatory filing showed 65 positions as of June 30, 2026. FHLC follows the MSCI USA IMI Health Care Index, which also covers mid-size and small companies. Its filing showed 337 positions as of July 31, 2026.
Most of that extra breadth is in biotech. CRISPR Therapeutics( NASDAQ:CRSP ), the gene-editing developer, made up 0.058% of FHLC as of July 31. It does not appear in XLV's holdings. FHLC's filing also lists dozens of smaller drug developers working on gene therapy, RNA medicines and rare diseases, along with mid-size device makers and diagnostics labs.
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For a retiree, owning the broader sector means you hold a small piece of tomorrow's potential leaders today. XLV generally adds a company only after it grows large enough to join the S&P 500. FHLC already owns a sliver of that company on the way up.
Less Riding on Two Giants
Spreading money across more companies also lowers concentration. Eli Lilly( NYSE:LLY ) made up 13.35% of FHLC as of July 31, 2026, compared with 16.51% of XLV as of June 30, 2026. Johnson & Johnson( NYSE:JNJ ) made up 8.93% of FHLC and 10.64% of XLV on those same dates. Together, the two companies account for 22.28% of FHLC and 27.15% of XLV. (These are the most recent filing dates for each fund, which are one month apart.) So if either of those two stocks has a bad quarter, it hurts FHLC somewhat less.
Returns Have Moved Almost in Lockstep
So far, the wider reach hasn't produced different results. Here are adjusted price returns through October 29, 2026:
| Period |
FHLC |
XLV |
|---|---|---|
| Year to date |
20.16% |
20.37% |
| One year |
29.13% |
29.96% |
| Five years |
42.45% |
49.15% |
| Ten years |
218.05% |
223.03% |
XLV has kept a small lead over every period, and the gap is widest over five years. Choosing FHLC is about how your money is spread across the sector. It doesn't come with a track record of beating XLV.
Why So Few Investors Know FHLC
Trading volume shows how lopsided the attention is. On October 29, FHLC traded 253,806 shares, while XLV traded 15,068,397. Money flows follow the same pattern. The October 14 report estimated $588.9 million of inflows into XLV and $48.6 million into FHLC. XLV's long history and heavy trading make it the go-to fund for traders who move money between sectors, and that keeps it in the headlines. FHLC gets far less of that attention.
Catch Retirees Need to Weigh Before Switching
Small biotechs can swing hard. A single failed drug trial or a dilutive stock offering can cut a small developer's value in half. FHLC holds these names at tiny weights, so one setback won't sink the fund, but together they can make the ride bumpier when investors turn away from riskier stocks.
Fund size and trading carry their own risks. Lower volume can mean wider spreads between the buying and selling price, which is why some investors use limit orders. Funds that fail to attract enough money can be closed, which forces a sale and can trigger a taxable gain in a regular brokerage account. FHLC's multibillion-dollar asset base gives it a buffer, but it's still a fraction of XLV's size. Compare expense ratios on each fund's current fact sheet before you decide.
Who Each Fund Fits
FHLC suits buy-and-hold retirees who want to own the whole health care sector, including smaller innovators, and rely a bit less on Eli Lilly and Johnson & Johnson. XLV is a better fit for investors who value deep liquidity, trade more often, or want to stick with established large-cap health care companies. Before choosing either one, check each fund's next holdings filing to see whether the gap in biotech exposure and concentration still holds.
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