What is the main difference between FHLC and VHT regarding fees?

FHLC has an expense ratio of 0.08%, while VHT has 0.09%. Although the difference of 0.01 percentage points seems small, over long periods, lower fees can enhance net returns by reducing the annual cost burden. Both funds track the health care sector, so fee efficiency is a key factor for cost-conscious investors when evaluating similar products with minimal structural differences in exposure.

What does tracking mean in the context of FHLC and VHT?

The fund data indicates the specific index tracked is not available for either FHLC or VHT. Generally, ETFs aim to replicate a benchmark's performance. Without knowing the exact index, investors should review each provider's methodology to understand how closely FHLC or VHT mirrors the intended health care market exposure. Tracking accuracy affects how well the fund reflects sector movements compared to its target.

How do the top holdings of FHLC and VHT compare?

FHLC and VHT share the same top ten holdings: LLY, JNJ, ABBV, MRK, UNH, TMO, AMGN, GILD, ABT, and PFE. However, weights differ slightly; for instance, LLY is 12.86% in FHLC versus 12.79% in VHT. This high overlap suggests similar concentration in large-cap health care firms, meaning the funds may react similarly to stock-specific news or sector shifts despite different issuers.

Which fund offers a higher dividend yield?

VHT provides a dividend yield of 1.49%, compared to FHLC's 1.24%. Higher yields may attract income-focused investors, but yields depend on underlying companies' payout policies. Dividends are not guaranteed and can fluctuate. While VHT offers a slightly higher current income stream, both funds are exposed to the same broad set of health care companies, so distribution trends may align over time based on sector performance.

How does fund size affect FHLC and VHT?

VHT has significantly higher net assets of $19.1 billion compared to FHLC's $3.5 billion. Larger funds like VHT often benefit from tighter bid-ask spreads due to higher liquidity, reducing trading costs for investors. FHLC remains sufficiently liquid for most retail traders but may exhibit slightly wider spreads. Investors should consider liquidity needs when trading large volumes, as asset size impacts market microstructure and execution ease.

Why do the top holdings in both funds create concentration risk?

Both FHLC and VHT allocate substantial weight to their top ten holdings, such as Eli Lilly and Johnson & Johnson. This concentration means portfolio performance is heavily influenced by these few large-cap stocks. If any major holding underperforms, it could drag down the fund's overall returns. Such exposure limits diversification benefits within the health care sector, making both funds vulnerable to company-specific or sector-specific downturns.

How do inception dates influence the evaluation of these ETFs?

VHT was launched in January 2004, while FHLC began in October 2013. VHT offers a longer operating history, providing more extensive data on performance and tracking accuracy over various market cycles. FHLC, despite being newer, still has over a decade of track record. Investors may prefer VHT's longer history for trend analysis, though both funds now provide sufficient historical data for evaluating health care sector exposure.

Are FHLC and VHT suitable for broad market diversification?

Neither FHLC nor VHT is designed for broad market diversification, as both focus exclusively on the health care sector. Sector-specific exposure increases risk compared to total market index funds. These ETFs suit investors seeking targeted health care allocation, not those wanting diversified exposure across multiple industries. Reviewing portfolio composition is essential to ensure these sector funds align with an individual's risk tolerance and diversification strategy.

What should beginners know before comparing FHLC and VHT?

Beginners should focus on expense ratios, net assets, and holdings overlap. While FHLC offers lower fees at 0.08%, VHT provides higher liquidity with $19.1 billion in assets. Both funds share identical top ten holdings, resulting in similar sector exposure. Understanding these factors helps in evaluating cost-efficiency and tradeability. Always remember that past performance does not guarantee future results, and sector investments carry inherent volatility risks.

How do ETF dividends work in sector funds like FHLC and VHT?

ETFs like FHLC and VHT collect dividends from underlying holdings and distribute them to shareholders. The yield reflects recent distributions relative to the fund's price. Unlike individual stocks, ETF dividends may vary based on the constituent companies' payout decisions. Investors receive these distributions periodically, but the total return also depends on the fund's capital appreciation or depreciation within the health care sector.

Does the lower expense ratio of FHLC guarantee better performance?

FHLC's 0.08% expense ratio is marginally lower than VHT's 0.09%, but this alone does not guarantee better performance. Tracking error, market conditions, and portfolio management impact returns. The 0.01 percentage point difference is negligible in most scenarios. Investors should monitor how closely each fund mirrors the health care sector rather than assuming lower fees automatically translate to superior outcomes over any given timeframe.

Can I hold both FHLC and VHT in the same portfolio?

Holding both FHLC and VHT is possible but generally redundant since they share the same top ten holdings and target the health care sector. This overlap offers no significant diversification benefit. Investors typically choose one based on preferences like expense ratios or fund size. Maintaining both could complicate portfolio rebalancing without improving risk-adjusted returns, as the underlying exposures are substantially similar.

FHLC vs VHT

Two funds, one decision: we compare cost, performance and what each ETF actually holds in October 2026.

Compare FHLC and VHT. This page examines fees, holdings, and dividends for Fidelity MSCI Health Care ETF and Health Care Vanguard ETF. It details how each fund tracks the health care market. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

FHLC

Metric

VHT

0.08%

Expense Ratio

0.09%

1.24%

Dividend Yield

1.49%

$3.48B

Net Assets

$19.11B

349

Holdings

424

Oct 21, 2013

Inception Date

Jan 26, 2004

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Index Tracked

–

Health

Fund Category

Health

FHLC costs about $1.00 less per year for every $10,000 invested.

Shared Top Holdings

Holding	FHLC	VHT
LLYEli Lilly and Company	12.86%	12.79%
JNJJohnson & Johnson	9.07%	8.72%
ABBVAbbVie Inc.	6.50%	6.26%
MRKMerck & Co., Inc.	5.07%	5.04%
UNHUnitedHealth Group Incorporated	4.75%	4.89%
TMOThermo Fisher Scientific Inc.	3.41%	3.17%
AMGNAmgen Inc.	2.86%	3.21%
GILDGilead Sciences, Inc.	2.61%	2.51%
ABTAbbott Laboratories	2.48%	2.66%
PFEPfizer Inc.	2.20%	2.24%

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Investment Analysis

FHLC

Pros

The fund offers a slightly lower expense ratio of 0.08 per cent, reducing the annual fee burden for shareholders compared to similar products.
With net assets of $3.5 billion, the fund provides sufficient liquidity for most retail investors while avoiding the massive scale of broader market competitors.
The dividend yield of 1.24 per cent indicates a moderate income distribution, reflecting the fund's focus on established companies within the health care sector.

Considerations

At $3.5 billion in net assets, the fund is smaller than its main competitor, which may result in wider bid-ask spreads for active traders.
The fund's inception date of October 2013 is more recent than older rivals, offering a shorter track record for potential investors to evaluate.
As the top ten holdings account for a significant portion of the portfolio, investor exposure is concentrated among a handful of large health care firms.

VHT

Pros

The fund has substantial net assets of $19.1 billion, indicating strong investor confidence and likely tighter trading spreads due to higher liquidity.
With an inception date of January 2004, the fund boasts a long operating history, providing extensive data on performance and tracking accuracy over time.
The dividend yield of 1.49 per cent is higher than many sector peers, offering a more attractive income stream for yield-focused investors.

Considerations

The expense ratio of 0.09 per cent is marginally higher than comparable funds, which could slightly diminish net returns over long investment horizons.
Significant concentration in top holdings like Eli Lilly and Johnson & Johnson means performance is heavily influenced by these specific large-cap stocks.
Despite its size, the fund's sector exposure remains narrow, limiting diversification benefits for investors seeking broader market representation beyond health care.

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About FHLC and VHT

FHLC (FHLC)

VHT (VHT)

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FHLC vs VHT

Fund Snapshot