Which Is the Better Healthcare ETF: First Trust’s High-Conviction FBT or Vanguard’s Low-Cost VHT?
Key Points
-
Vanguard Health Care ETF is significantly more affordable than First Trust NYSE Arca Biotechnology Index Fund while offering much broader exposure across the healthcare sector.
-
First Trust NYSE Arca Biotechnology Index Fund has outperformed on a 1-year total return basis but historically exhibits higher volatility and a steeper maximum drawdown.
-
Vanguard Health Care ETF maintains over 400 holdings, including major pharmaceutical companies, whereas the First Trust fund concentrates on just 30 biotechnology stocks.
- 10 stocks we like better than Vanguard World Fund – Vanguard Health Care ETF ›
The First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) provides concentrated, high-conviction exposure to biotechnology firms, while the Vanguard Health Care ETF (NYSEMKT:VHT) offers a cheaper, diversified basket across the entire healthcare sector.
Both funds target the healthcare space, but their scopes and strategies differ wildly. Investors choosing between them must decide if they want a specialized bet on biotechnology or a broader investment that includes pharmaceuticals and medical equipment. This analysis breaks down the cost, risk, and portfolio differences between the two products.
Snapshot (cost & size)
| Metric | FBT | VHT |
|---|---|---|
| Issuer | First Trust | Vanguard |
| Share price | $245.30 (as of 2026-07-20) | $299.49 (as of 2026-07-20) |
| Expense ratio | 0.55% | 0.09% |
| 1-yr return (as of 2026-07-20) | 51.60% | 25.20% |
| Dividend yield | n/a | 1.60% |
| Beta | 0.66 | 0.60 |
| AUM | $3.2 billion | $20.4 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 primary differentiator for long-term holders. The Vanguard fund carries a low expense ratio of 0.09%, making it significantly more affordable than the First Trust fund, which charges 0.55% for its specialized index-tracking strategy.
Performance & risk comparison
| Metric | FBT | VHT |
|---|---|---|
| Max drawdown (5 yr) | (29.90%) | (17.70%) |
| Growth of $1,000 over 5 years (total return) | $1,471.00 | $1,281.00 |
What’s inside
The Vanguard Health Care ETF (NYSEMKT:VHT) manages $20.4 billion in assets under management (AUM) and maintains a portfolio of 411 holdings. It provides comprehensive exposure to the sector, with 100.00% of its assets concentrated in healthcare industries. Its largest positions include Eli Lilly (NYSE:LLY) at 14.19%, Johnson & Johnson (NYSE:JNJ) at 8.89%, and AbbVie (NYSE:ABBV) at 6.56%. The fund was launched in 2004.
The First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) manages $3.2 billion in AUM and takes a narrower approach by holding only 30 securities. It focuses entirely on the biotechnology segment of the healthcare sector. Its top holdings include BeOne Medicines (NASDAQ:ONC) at 3.49%, Veracyte (NASDAQ:VCYT) at 3.47%, and NeoGenomics (NASDAQ:NEO) at 3.46%. The fund was launched in 2006.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The healthcare sector is generating more investment headlines than it has in years. Biopharma deal activity surpassed $65 billion in the first quarter of 2026 alone, as pharmaceutical giants raced to acquire the next generation of treatments in oncology, obesity, and immunology. That wave of acquisition activity has been particularly kind to smaller biotechnology companies, exactly the kind that populate FBT’s equal-weighted roster of 30 biotech names.
FBT’s concentrated design means a breakthrough at any single holding lifts the entire fund. That dynamic drove extraordinary returns over the past year. The flip side is equally true: A failed clinical trial or disappointing FDA decision can hit with the same force.
VHT holds more than 400 healthcare companies spanning pharmaceuticals, medical devices, insurers, and biotechnology, at a cost more than five times lower than FBT. That breadth absorbs individual setbacks without the same portfolio-wide impact.
If you want a portfolio with healthcare as a stabilizing force that also has income potential, VHT is the stronger long-term choice. FBT rewards those with specific conviction in biotechnology’s current momentum and the risk tolerance to ride its sharp swings.
Should you buy stock in Vanguard World Fund – Vanguard Health Care ETF right now?
Before you buy stock in Vanguard World Fund – Vanguard Health Care ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard World Fund – Vanguard Health Care ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $370,332!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,272,280!*
Now, it’s worth noting Stock Advisor’s total average return is 904% — a market-crushing outperformance compared to 208% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of July 23, 2026.
Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, BeOne Medicines, and Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
