XLV vs. PJP: How Broad Healthcare Diversification Stacks Up to Pharma Stocks

Key Points The State Street Health Care Select Sector SPDR ETF (XLV) offers significantly lower ownership costs, with an expense ratio of 0.08% compared to 0.58% for the Invesco Pharmaceuticals ETF (PJP). PJP provides concentrated exposure to 28 pharmaceutical stocks, while XLV holds 61 diversified healthcare companies. XLV delivers a higher trailing dividend yield of 1.49% versus 0.84% for PJP. 10 stocks we like better than Select Sector SPDR Trust - State Street Health Care Select Sector SPDR ETF › Investors seeking healthcare exposure must decide between the broad diversification of the healthcare sector and a targeted bet on pharmaceutical manufacturers. The State Street Health Care Select Sector SPDR ETF (NYSEMKT:XLV) provides broad, low-cost exposure to the total healthcare sector, while the Invesco Pharmaceuticals ETF (NYSEMKT:PJP) offers a more concentrated, industry-specific strategy with higher fees. This comparison explores how a low-cost sector giant stacks up against a focused industry fund during varying market cycles. Snapshot (cost & size) Metric PJP XLV Issuer Invesco State Street Share price (as of Sept. 23, 2026) $125.46 $168.80 Expense ratio 0.58% 0.08% 1-yr return (as of Sept. 23, 2026) 39.04% 26.41% Dividend yield 0.84% 1.49% Beta (5Y monthly) 0.48 0.52 Assets under management (AUM) $532.5 million $43.9 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. XLV offers both cost and income advantages with its lower expense ratio and higher dividend yield. For every $10,000 invested in XLV, investors can expect to pay $8 per year in fees compared to $58 per year in PJP. However, PJP has outperformed XLV over the last 12 months. Performance & risk comparison Metric PJP XLV Max drawdown (5 yr) -17.5% -17.1% Growth of $1,000 over 5 years (total return) $1,717 $1,400 What's inside XLV aims to track the healthcare segment of the S&P 500. It holds 61 stocks, and its largest positions include Eli Lilly , Johnson & Johnson , and AbbVie . The fund was launched in 1998 and has paid $2.53 per share in dividends over the trailing 12 months. PJP, on the other hand, focuses specifically on the pharmaceutical sector. It holds 28 stocks, and its top holdings are AbbVie, Eli Lilly, and Johnson & Johnson. This fund was launched in 2005 and has paid $1.06 per share in dividends over the trailing 12 months. For more guidance on ETF investing, check out the full guide at this link . Which looks like the better buy Choosing between XLV and PJP will largely come down to your preferences in diversification and what you're looking to achieve with an ETF. PJP takes a narrower approach, with fewer than half the number of holdings of XLV. It focuses exclusively on pharma stocks, while XLV covers the broader healthcare sector within the S&P 500. Typically, less diversification can lead to greater short-term volatility in funds. In this case, however, the two ETFs offer nearly identical max drawdowns and betas, suggesting they've experienced roughly the same level of price volatility over the last five years. This may be due in part to XLV's concentration among its top positions. While this fund holds more stocks than PJP, its top three stocks account for just over 33% of the portfolio. PJP holds the same top three holdings as XLV, yet those stocks make up around 16% of assets. In other words, while XLV provides exposure to more stocks within the healthcare sector, it devotes a larger share of its portfolio to industry giants. When those stocks are performing well, it can lead to outsize performance. But if they experience volatility, it could limit this ETF's returns. The right choice for you will depend on the gaps you're looking to fill in your portfolio. PJP can be a smart option for those seeking exposure specifically to pharmaceutical stocks, while XLV provides more expansive coverage of the large-cap healthcare sector. Should you buy stock in Select Sector SPDR Trust - State Street Health Care Select Sector SPDR ETF right now? Before you buy stock in Select Sector SPDR Trust - State Street Health Care Select Sector SPDR 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 Select Sector SPDR Trust - State Street Health Care Select Sector SPDR 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 $389,154 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,406,303 !* Now, it’s worth noting Stock Advisor’s total average return is 949 % — a market-crushing outperformance compared to 214% 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. See the 10 stocks » *Stock Advisor returns as of September 23, 2026. Katie Brockman 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 .

The State Street Health Care Select Sector SPDR ETF (XLV) offers significantly lower ownership costs, with an expense ratio of 0.08% compared to 0.58% for the Invesco Pharmaceuticals ETF (PJP).

PJP provides concentrated exposure to 28 pharmaceutical stocks, while XLV holds 61 diversified healthcare companies.

XLV delivers a higher trailing dividend yield of 1.49% versus 0.84% for PJP.

Investors seeking healthcare exposure must decide between the broad diversification of the healthcare sector and a targeted bet on pharmaceutical manufacturers.

The State Street Health Care Select Sector SPDR ETF (NYSEMKT:XLV) provides broad, low-cost exposure to the total healthcare sector, while the Invesco Pharmaceuticals ETF (NYSEMKT:PJP) offers a more concentrated, industry-specific strategy with higher fees.

This comparison explores how a low-cost sector giant stacks up against a focused industry fund during varying market cycles.

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.