IHE vs. XBI: Pharma Stability or Biotech Growth -- Which Healthcare ETF Is the Better Buy?
XBI is up nearly 80% over the past year, but has experienced a much larger maximum drawdown over the past five years. IHE has delivered steadier returns and offers a higher dividend yield.
Overview
Comparing the iShares U.S. Pharmaceuticals ETF (NYSEMKT:IHE) to the State Street SPDR S&P Biotech ETF (NYSEMKT:XBI) illustrates a familiar healthcare trade-off: the relative stability of massive pharmaceutical conglomerates versus the high-volatility growth potential of early stage biotechnology.
Investors looking for healthcare exposure often face a choice between specialized sub-sectors with very different risk profiles. While both of these funds invest in medical innovation, IHE leans on established pharma giants with steady cash flows, while XBI tracks a broader, more volatile slice of the biotech industry that's highly sensitive to clinical trial results and research breakthroughs.
Details
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-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Source
Originally published at www.fool.com.