Healthcare sector demand is expected to grow significantly over the next decade, drawing investor attention to targeted exchange-traded funds offering distinct exposure strategies.
State Street operates two ETFs that allow investors to participate in healthcare growth through very different risk and return profiles.
The State Street SPDR S&P Biotech ETF (XBI) and the State Street SPDR S&P Pharmaceuticals ETF (XPH) both carry an expense ratio of 0.35%, meaning investors pay just $3.50 annually per $1,000 invested.
Despite identical costs, the two funds differ sharply in size, with XBI holding $10.2 billion in assets under management compared to XPH’s $0.6 billion.
XBI posted a one-year return of 51.2% as of September 28, 2026, significantly outpacing XPH’s one-year return of 32.5% over the same period.
However, XPH delivered 19% higher returns over five years despite carrying roughly half the volatility of its biotech-focused counterpart.
XBI recorded a maximum five-year drawdown of 63.9%, while XPH’s maximum drawdown over the same period was a considerably more moderate 34.9%.
A $1,000 investment in XBI five years ago would have grown to $1,224, while the same amount invested in XPH would have reached $1,327, highlighting XPH’s superior long-term risk-adjusted performance.
XBI holds 165 stocks and uses an equal-weight structure, giving smaller clinical-stage companies the same portfolio influence as larger, more established biotechnology firms.
XBI’s largest positions include Apogee Therapeutics (APGE) at 1.64%, Oruka Therapeutics (ORKA) at 1.39%, and Dianthus Therapeutics (DNTH) at 1.37%, reflecting its broad exposure to high-growth sub-sectors.
XPH tracks the S&P Pharmaceuticals Select Industry Index and holds 65 stocks, with top positions including Crinetics Pharmaceuticals (CRNX) at 3.58%, MBX Biosciences (MBX) at 3.20%, and Definium Therapeutics (DFTX) at 2.90%.
XPH uses a modified equal-weight approach that similarly tilts toward smaller, less-proven drug makers rather than large pharmaceutical industry heavyweights.
XBI carries a beta of 1.12, indicating higher sensitivity to market movements, while XPH’s beta of 0.72 signals considerably more stability during periods of broader market turbulence.
XPH offers a slightly higher dividend yield of 0.5% compared to XBI’s 0.3%, though both remain low relative to broader market averages.
The core decision between the two funds ultimately comes down to an investor’s tolerance for volatility and their preference for either the high-risk, high-reward biotechnology space or the comparatively steadier pharmaceutical industry.
