The Fidelity MSCI Health Care Index ETF (FHLC) and Vanguard Health Care Index Fund ETF Shares (VHT) are two health care sector ETFs that offer investors exposure to the health care industry. However, there are some key differences between the two funds.
FHLC vs VHT: What Are the Differences?
- FHLC tracks the performance of the MSCI USA IMI Health Care Index, while VHT seeks to follow the performance of the MSCI U.S. Investable Market Health Care Index.
- VHT has a much larger asset base than FHLC, with over 16 billion in assets under management than FHLC’s 2.8 billion.
- In terms of expense ratio, VHT is slightly more expensive than FLHC, with an expense ratio of 0.10% compared to FLHC’s 0.08%. For every $10,000 invested in the Vanguard Healthcare ETF, $10 will be used to cover the yearly cost of the index fund.
FHLC vs VHT: How Are They Similar?
- Fidelity and Vanguard Healthcare ETFs both invest in stocks of small, mid-, and large-cap U.S. health-care companies.
- FHLC and VHT also have the same dividend schedule. This means they distribute dividends to shareholders every quarter. Their dividend yields are 1.26% and 1.24%, respectively.
- The two ETFs have a relatively low turnover rate. This is good for investors as they likely see higher net returns.
FHLC vs VHT: Portfolio Composition
It’s not surprising to see that their major holdings are identical since they track a similar benchmark index.
FHLC Top 10 Holdings
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| UnitedHealth Group Inc. | UNH | 7.44% |
| Johnson & Johnson | JNJ | 7.08% |
| Pfizer Inc. | PFE | 5.21% |
| Thermo Fisher Scientific Inc. | TMO | 4.13% |
| Abbott Laboratories | ABT | 3.92% |
| AbbVie Inc. | ABBV | 3.76% |
| Eli Lilly & Co. | LLY | 3.53% |
| Danaher Corp. | DHR | 3.32% |
| Merck & Co. Inc. | MRK | 3.05% |
| Medtronic PLC | MDT | 2.19% |
VHT Top 10 Holdings
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| UnitedHealth Group Inc. | UNH | 7.46% |
| Johnson & Johnson | JNJ | 7.10% |
| Pfizer Inc. | PFE | 5.22% |
| Thermo Fisher Scientific Inc. | TMO | 4.14% |
| Abbott Laboratories | ABT | 3.93% |
| AbbVie Inc. | ABBV | 3.77% |
| Eli Lilly & Co. | LLY | 3.54% |
| Danaher Corp. | DHR | 3.33% |
| Merck & Co. Inc. | MRK | 3.06% |
| Medtronic PLC | MDT | 2.19% |
FHLC vs VHT: Annual Performance
| Funds | Fidelity® MSCI Health Care Index ETF | Vanguard Health Care Index Fund ETF Shares |
|---|---|---|
| 1 month | -7.88% | -7.88% |
| 3 months | -4.79% | -4.76% |
| 6 months | -3.68% | -3.64% |
| 1 year | +8.39% | +8.48% |
| 3 years | +14.68% | +14.75% |
| 5 years | +15.13% | +15.18% |
Which is Better, FHLC or VHT?
FHLC and VHT are solid investments for anyone who wants exposure to the U.S healthcare sector.
As you begin to decide which fund to buy for your portfolio, consider the following:
- The Vanguard Healthcare ETF has been around longer than the Fidelity Healthcare ETF. VHT was launched in 2004 while FHLC began trading in 2013.
- FHLC charges a smaller fee than VHT. This means you save more in yearly expenses incurred by the fund.
- FHLC portfolio has about 478 stocks, while VHT has only about 449 stocks. While the difference in holdings may not seem like a lot, the Fidelity fund is more diversified than the Vanguard fund.
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