State Street SPDR S&P Pharmaceuticals vs First Trust NYSE Arca Biotech: Which Is the Better ETF For Your Portfolio? |

The State Street SPDR S&P Pharmaceuticals ETF (XPH +0.84%) offers a lower-cost entry into the drug manufacturing space, while the First Trust NYSE Arca Biotechnology Index Fund (FBT 0.71%) provides concentrated exposure to biotechnology.

Investors seeking healthcare exposure often choose between mature pharmaceutical giants and high-growth biotechnology firms. This comparison examines how these two funds approach their respective sub-sectors, balancing the established cash flows of pharmaceuticals with the research-driven potential and the higher concentration of biotech innovators that populate the healthcare landscape.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The State Street fund is significantly more affordable, carrying a 0.35% expense ratio compared to the 0.55% charged by the First Trust fund. This cost difference can impact long-term compounding for investors who prioritize cost efficiency over a 12-month period.

Performance & risk comparison

What’s inside

The State Street SPDR S&P Pharmaceuticals ETF provides exposure to the pharmaceutical segment of the S&P Total Market Index across various market caps. This 100% healthcare-exclusive fund holds 59 positions, offering broader diversification than more focused sector funds. Its largest holdings include Organon + Co (OGN 0.07%) at 3.97%, Corcept Therapeutics (CORT 0.41%) at 3.74%, and Liquidia (LQDA 0.55%) at 2.91%. Launched in 2006, it tracks a modified equal-weighted index and paid $0.37 per share over the trailing 12 months.

The First Trust NYSE Arca Biotechnology Index Fund tracks an index of 30 biotechnology companies, resulting in a more concentrated portfolio than its pharmaceutical peer. Its 100% healthcare-focused strategy features positions in Corcept Therapeutics (CORT 0.41%) at 4.97%, Bruker (BRKR 1.88%) at 4.7%, and Veracyte (VCYT 0.19%) at 4.47%. Also launched in 2006, this fund manages its assets under management (AUM) by targeting companies involved in genomic research and drug manufacturing.

Which looks like the better buy?

The SPDR S&P Pharmaceuticals (XPH) and First Trust NYSE Arca Biotech (FBT) are both healthcare-focused ETFs that have some overlap in their portfolio holdings.

Since the First Trust Biotech fund has fewer stocks overall, it’s more concentrated. Yet as current constituted, both ETFs have 42% of their assets invested in their top 10 holdings. That means with each fund, performance will be driven by a handful of names. Still, with the exception of Corcept Therapeutics, which is a top-10 holding for both, their heaviest positions differ.

Turning to performance, the SPDR S&P Pharmaceuticals ETF has a better one-year return than its counterpart, at 38% to 35.90%. Part of that is due to its dividend payout. Since dividends can be taxed depending on the type of account the ETF is held in, that is a consideration that can make real returns slightly worse for investors.

Still, over the past 52 weeks, XPH has slightly outperformed FBT purely on price. The SPDR fund has returned 38% in price compared to about 36% for FBT.

Considering that the SPDR S&P Pharmaceuticals ETF has a lower expense ratio than the First Trust NYSE Biotechnology ETF, that makes XPH the more appealing holding for the long haul.

For more guidance on ETF investing, check out the full guide at this link.