Vanguard Health Care ETF vs iShares U.S. Healthcare ETF
Key Points
Vanguard Health Care ETF provides significantly broader exposure with 411 holdings compared to 100 for iShares U.S. Healthcare ETF.
The Vanguard fund maintains a lower expense ratio of 0.09%, while the iShares fund charges 0.37%.
Both ETFs delivered identical 5-year growth of $1,425 on a $1,000 investment, despite differences in cost and portfolio depth.
Vanguard Health Care ETF (NYSEMKT:VHT) and iShares U.S. Healthcare ETF (NYSEMKT:IYH) provide similar exposure, but the Vanguard fund offers significantly higher diversification at a fraction of the cost.
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Both exchange-traded funds target the U.S. healthcare sector, providing broad access to medical companies. This comparison examines how their different management styles and costs could influence an investor's long-term returns, especially considering the massive scale of the Vanguard fund versus the more concentrated iShares approach.
Snapshot (cost & size)
| Metric | IYH | VHT |
|---|---|---|
| Issuer | iShares | Vanguard |
| Share price | $74.49 (as of 2026-10-15) | $329.15 (as of 2026-10-15) |
| Expense ratio | 0.37% | 0.09% |
| 1-yr return (as of Oct. 15, 2026) | 25.5% | 25.5% |
| Dividend yield | 1.1% | 1.4% |
| Beta | 0.56 | 0.58 |
| AUM | $4.2 billion | $21.8 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Cost is a clear differentiator in this matchup. The Vanguard fund is notably more affordable with a 0.28 percentage point lower expense ratio, and its 1.4% yield currently edges out the 1.1% payout from the iShares fund.
Performance & risk comparison
| Metric | IYH | VHT |
|---|---|---|
| Max drawdown (5 yr) | (17.9%) | (17.7%) |
| Growth of $1,000 over 5 years (total return) | $1,425 | $1,425 |
What's inside
Vanguard Health Care ETF offers broad exposure across the entire sector, holding 411 stocks. Its largest positions include Eli Lilly & Co (NYSE:LLY) at 12.95%, Johnson & Johnson (NYSE:JNJ) at 8.79%, and AbbVie Inc (NYSE:ABBV) at 6.46%. It launched in 2004. Vanguard Health Care ETF has paid $4.61 per share over the trailing 12 months, which on its recent ~$329.2 share price works out to a 1.4% yield.
iShares U.S. Healthcare ETF is more concentrated, holding 100 stocks with tilts toward pharmaceuticals at 37%, biotechnology at 24%, and healthcare equipment at 14%. Top holdings include Eli Lilly at 15.12%, Johnson & Johnson at 9.23%, and Abbvie at 7.59%. It launched in 2000. iShares U.S. Healthcare ETF has paid $0.80 per share over the trailing 12 months, which on its recent ~$74.5 share price works out to a 1.1% yield.
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Which looks like the better buy
While both ETFs have strengths, Vanguard Health Care ETF is the better choice for most investors as it costs less and holds more stocks. iShares U.S. Healthcare ETF may be a better fit if you want a more concentrated portfolio of large healthcare companies and don't mind paying higher fees.
While IYH had a slightly higher one-year return, the small difference doesn't guarantee future outperformance. And though its larger-company focus could help when major healthcare stocks do well, it also means you're taking on more concentrated risk.
The bottom line is this: Choose VHT for lower costs and broader exposure and consider IYH if you want a more concentrated portfolio of large healthcare companies.
Take time to consider your long-term goals and risk tolerance before deciding.
Dana George has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.