What is the difference between a sector ETF and a broad market ETF?

A sector ETF focuses on one specific part of the economy, whereas a broad market ETF holds many different sectors. Fund A tracks the health care sector, meaning it holds companies primarily in that industry. Fund B tracks the S&P 500, containing large US companies across all major sectors. Broad market ETFs generally offer more diversification by spreading risk across technology, health care, financials, and other industries, while sector ETFs concentrate exposure on a single theme or industry group.

How do expense ratios impact long-term investment returns?

An expense ratio is the annual fee charged by a fund, deducted from its assets. Fund A has an expense ratio of 0.09%, while Fund B has 0.03%. This means Fund A costs 0.06 percentage points more per year. Over time, even small fee differences can reduce total returns because the lower fee leaves more money invested. For example, paying higher fees consistently can slightly dampen compound growth. Investors often check these costs as part of evaluating the efficiency of a fund relative to its intended investment goal.

Why does fund size and liquidity matter for investors?

Net assets represent the total value of all money invested in a fund. Fund B holds $1.08 trillion in assets, while Fund A holds $19.1 billion. Generally, larger funds like Fund B tend to have higher liquidity, meaning shares can be bought and sold more easily with smaller price gaps between buyers and sellers. While Fund A is still a substantial fund, its smaller size compared to broad market giants may result in slightly different trading characteristics. Liquidity is an important practical consideration for active traders.

How similar are the top holdings of these two ETFs?

The top ten holdings for each fund show no overlap. Fund A is heavily weighted towards health care companies like Eli Lilly and Johnson & Johnson. In contrast, Fund B is dominated by large technology and consumer stocks such as Nvidia and Apple. This lack of shared top holdings indicates that these two funds provide very different investment exposures. Holding both funds would mean owning distinct sets of companies, with Fund A focusing on healthcare innovations and Fund B capturing broader market leaders.

Which investing goals are typically associated with these funds?

Fund A is often associated with investors seeking targeted exposure to the health care industry. This might be for those who believe the sector will outperform or for adding a defensive component to a portfolio. Fund B is typically associated with building a core portfolio foundation that mirrors the overall US stock market. It is designed for investors seeking broad diversification across large companies without betting on a single industry. The choice depends on whether an investor wants sector-specific risk or whole-market diversification.

How do dividend yields differ between the two funds?

Dividend yield indicates the annual income payment relative to the share price. Fund A has a yield of 1.49%, whereas Fund B has 1.03%. Fund A pays out more in distributions relative to its price compared to Fund B. However, neither fund is generally considered a high-income instrument compared to dedicated dividend ETFs. The yield difference reflects the varying dividend policies of the underlying companies in the health care sector versus the broader S&P 500, which includes many growth companies that pay smaller dividends.

What is the benefit of owning a fund with a long track record?

Fund A was launched on 26 January 2004, giving it over two decades of operating history. Fund B was launched on 7 September 2010. A longer track record allows investors to see how a fund has performed through various economic cycles, including recessions and bull markets. While past performance does not guarantee future results, a longer history provides more data points for assessing consistency and how the fund's strategy has held up over time compared to newer offerings like Fund B.

Why is the health care sector often considered defensive?

Health care is often labelled a defensive sector because people require medical services, drugs, and treatments regardless of economic conditions. This can make Fund A less sensitive to recessionary pressures compared to more cyclical sectors like technology or consumer discretionary. However, 'defensive' does not mean risk-free; regulatory changes and patent expirations still impact specific companies. Fund B, being broad market, contains both defensive sectors and cyclical sectors, so its performance depends on the overall economy rather than just one stable industry group.

How does concentration risk differ between sector and broad market funds?

Fund A concentrates all its capital in one industry. If the health care sector faces regulatory headwinds or poor market sentiment, the entire fund's value could decline significantly because there are no other sectors to offset those losses. Fund B diversifies across hundreds of large companies in many industries. While it has concentration in a few mega-cap stocks, a downturn in one sector is usually partially cushioned by stability in others. Sector funds inherently carry higher specific risk than broad market funds.

How does the S&P 500 index composition affect ETF performance?

Fund B tracks the S&P 500, an index comprising the 500 largest publicly traded companies in the US. The index is market-cap weighted, meaning larger companies like Nvidia and Apple have a bigger influence on the fund's movements than smaller companies. Recent data shows Fund B is sensitive to tech sector valuations because large growth stocks hold significant weight. This contrasts with Fund A, whose performance is strictly tied to the relative valuation and success of health care companies.

Can an ETF change its holdings over time?

Yes, ETFs must update their portfolios to accurately track their chosen indices or maintain their stated investment mandates. As companies grow, shrink, or merge, the index provider adjusts the weightings or removes and adds constituents. Both Fund A and Fund B are managed passively but are subject to rebalancing. Investors should remember that top holding percentages are snapshots and can shift, meaning the specific companies dominating the fund's performance will evolve as market capitalisations change.

What does it mean when an index tracked is listed as not available?

In some data feeds, the specific name of the index a fund tracks may be categorised as not available, even though the fund explicitly names it (like the S&P 500 or Health Care Investable Market Index). It is essential to refer to the fund's official prospectus for definitive index details. Regardless of the data feed limitation, the investment strategy remains clear: Fund A targets the health care sector, and Fund B targets the large-cap US market. This does not change the fund's actual holdings.

VHT vs VOO

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

Compare VHT (Health Care Vanguard ETF) and VOO (S&P 500 Vanguard ETF). This page examines fees, holdings, dividends and how each fund tracks its market. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

VHT

Metric

VOO

0.09%

Expense Ratio

0.03%

1.49%

Dividend Yield

1.03%

$19.11B

Net Assets

$1.08T

424

Holdings

516

Jan 26, 2004

Inception Date

Sep 7, 2010

–

Index Tracked

–

Health

Fund Category

Large Blend

VOO costs about $6.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

Discover More Comparisons

VHT vs XLV

VHT vs XLV compared: 0.09% vs 0.08% expense ratio, 424 vs 63 healthcare holdings, identical top 10 led by Eli Lilly, yield, size and which suits you.

VHT vs XBI

Compare VHT and XBI health care ETFs. Analyze 0.09% vs 0.35% fees, dividend yields of 1.49% vs 0.36%, holdings concentration, tracking, and net assets.

SCHG vs VOO

Compare SCHG and VOO: 0.04% vs 0.03% expense ratio, large-cap growth vs the S&P 500, 196 vs 516 holdings, and a 0.37% vs 1.04% dividend yield.

Investment Analysis

VHT

Pros

This fund provides focused exposure to the health care sector, which is often considered defensive.
The expense ratio of 0.09 per cent is competitive for a specialised sector ETF.
It has a long track record, having been launched on Jan 26, 2004.

Considerations

Investment in this fund concentrates risk within one industry, lacking broader market diversification.
The yield of 1.49 per cent is relatively low for income-focused investors.
The fund's assets of $19.1 billion are smaller than broad market ETFs.

VOO

Pros

This fund offers broad market exposure to large US companies, providing extensive diversification.
The expense ratio of 0.03 per cent is exceptionally low.
With $1.08 trillion in assets, it is highly liquid and well-established.

Considerations

The yield of 1.03 per cent may appeal less to those seeking income.
It has a shorter history than some peers, launched on Sep 7, 2010.
Holdings include large growth stocks, making it sensitive to tech sector valuations.

Related Market Insights

Dow's Record Rally: Value Takes The Lead

The Dow Jones hits 48,000, signalling a major market shift. Discover how value stocks, especially healthcare & financials, are leading this rally. Invest with Nemo.

Aimee Silverwood | Financial Analyst

13 November 2025

Read Insight

Related Market Insights

Dow's Record Rally: Value Takes The Lead

The Dow Jones hits 48,000, signalling a major market shift. Discover how value stocks, especially healthcare & financials, are leading this rally. Invest with Nemo.

Aimee Silverwood | Financial Analyst

13 November 2025

Read Insight

About VHT and VOO

VHT (VHT)

VOO (VOO)

VOO is Vanguard’s exchange-traded fund designed to track the S&P 500 Index, offering broad exposure to about 500 of the largest publicly traded US companies. It aims to replicate the index’s performance minus fees by holding the same stocks in similar proportions, making it a straightforward, passive way to access large‑cap US equities. Investors commonly use VOO as a core holding for long‑term growth or as a simple building block in a diversified portfolio. It typically offers high liquidity and regular dividend distributions from underlying companies. As with any equity investment, VOO’s value can rise or fall with the market, and past performance is not a guide to future returns. Fees, trading costs and potential tracking error reduce returns slightly. This information is general and educational only and not personalised financial advice — consider your own circumstances or speak to a qualified adviser before investing.

Which Baskets Do They Appear In?

Dow Record Rally: What's Next for Value Stocks?

The Dow Jones Industrial Average reached a historic high, closing above 48,000, fueled by the end of a government shutdown and a market rotation into value stocks. This shift suggests an investment opportunity in the outperforming healthcare and financial sectors, which are leading the charge.

Published: 13 November 2025

Explore Basket