What are the key differences in expenses between XBI and XLV?

The SPDR S&P Biotech ETF (XBI) has an expense ratio of 0.35%, whereas the Health Care Select Sector SPDR (XLV) has an expense ratio of 0.08%. This means XBI costs 0.27 percentage points more annually to manage. Higher fees reduce net returns over time, making the difference significant for long-term investors.

How do the sizes of XBI and XLV compare, and why does it matter?

XLV has significantly larger net assets at $43.5 billion compared to XBI's $10.3 billion. A larger fund like XLV often benefits from higher liquidity and potentially tighter bid-ask spreads, making it easier to trade. XBI, while smaller, remains a established fund with a reasonable trading history since its inception in 2006.

What is the difference in dividend yield between these two ETFs?

XLV offers a substantially higher dividend yield of 1.51% compared to XBI's very low yield of 0.36%. XLV's yield reflects income from established healthcare firms, while XBI's low yield indicates minimal income generation. Investors seeking regular cash distributions typically find this distinction crucial when comparing the funds.

How do the top holdings of XBI and XLV overlap?

While XBI focuses on biotechnology and XLV covers the broader health care sector, they share two top-10 holdings: AbbVie (ABBV) and Gilead Sciences (GILD). However, the weights differ greatly. XLV's top holdings like Eli Lilly (LLY) and Johnson & Johnson (JNJ) dominate its portfolio, whereas XBI holds them with much smaller weights, reflecting its diversified approach across smaller companies.

How do the concentration risks differ between XBI and XLV?

XLV faces considerable concentration risk with its top holding, Eli Lilly, accounting for 15.17% of assets, and Johnson & Johnson representing 10.57%. In contrast, XBI exhibits significant fragmentation with a small maximum position weight of just 1.91% for its largest holding, Twist Bioscience (TWST). This makes XBI less dependent on the performance of a few large companies compared to XLV.

Which ETF is more suitable for income-focused investors?

Income-focused investors might lean towards XLV due to its substantial dividend yield of 1.51%, which provides reliable distributions from established health care firms. XBI, with a very low yield of 0.36%, offers minimal income generation. XLV's higher yield aligns better with strategies prioritizing regular cash flow over pure growth, reflecting its broader sector exposure.

What sectors do XBI and XLV primarily track?

XBI provides targeted exposure to the biotechnology sector, focusing on smaller capitalisation companies. XLV, however, tracks the entire health care sector, including biotech but also pharmaceuticals, medical devices, and health care providers. This fundamental difference in scope means XLV offers broader diversification across all health care sub-sectors, while XBI is a specialised play on biotechnology.

How does the expense ratio difference impact long-term returns?

The 0.27 percentage point difference in expense ratios (0.35% for XBI vs 0.08% for XLV) can compound significantly over time. A higher expense ratio reduces the net return an investor receives. For example, if both funds achieved a 10% gross return, XBI's investor would net 9.65%, while XLV's investor would net 9.92%. This illustrates how lower costs enhance long-term wealth accumulation, making fee comparison essential for cost-conscious investors.

Why is liquidity important when comparing ETFs like XBI and XLV?

Liquidity refers to how easily an ETF can be bought or sold without affecting its price. XLV, with $43.5 billion in net assets, typically has higher liquidity and tighter bid-ask spreads than XBI, which has $10.3 billion. This means traders may execute orders in XLV with lower transaction costs and less slippage, making it potentially more efficient for frequent trading activities.

What does the inception date tell us about these ETFs?

XLV was launched on December 16, 1998, giving it a much longer trading history than XBI, which started on January 31, 2006. A longer history can provide more data for assessing performance across different market cycles. While XBI's 20-year history is reasonable, XLV's nearly 28-year track record offers a more extensive view of its behaviour in various economic conditions.

How should beginners interpret the shared holdings like ABBV and GILD?

Shared holdings such as AbbVie (ABBV) and Gilead Sciences (GILD) indicate that both funds invest in these companies, but the weights vary significantly. In XLV, ABBV constitutes 7.61% of assets, while in XBI it is only 1.51%. Beginners should note that owning both funds increases exposure to these shared names, potentially concentrating risk beyond what either fund holds alone. Understanding the weights clarifies the extent of this overlap and its impact on portfolio diversification.

XBI vs XLV

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

SPDR S&P Biotech ETF (XBI) versus Health Care Select Sector SPDR (XLV). Compare expense ratios (0.35% vs 0.08%), net assets ($10.3bn vs $43.5bn), dividend yields (0.36% vs 1.51%), and overlapping holdings like ABBV and GILD. Discover how each fund tracks its market. Educational content, not financial advice.

SPDR S&P Biotech ETF (XBI) versus Health Care Select Sector SPDR (XLV). Compare expense ratios (0.35% vs 0.08%), net assets ($10.3bn vs $43.5bn), dividend yields (0.36% vs 1.51%), and overlapping hold...

Fund Snapshot

Key Fund Metrics

XBI

Metric

XLV

0.35%

Expense Ratio

0.08%

0.36%

Dividend Yield

1.51%

$10.34B

Net Assets

$43.50B

167

Holdings

64

Jan 31, 2006

Inception Date

Dec 16, 1998

–

Index Tracked

–

Health

Fund Category

Health

XLV costs about $27.00 less per year for every $10,000 invested.

Shared Top Holdings

Holding	XBI	XLV
ABBVAbbVie Inc.	1.51%	7.61%
GILDGilead Sciences, Inc.	1.48%	3.04%

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Investment Analysis

XBI

Pros

It provides targeted biotechnology sector exposure through a diversified portfolio of smaller capitalisation companies.
Established fund age since 2006 allows for a reasonable historical trading record for investors.
Moderate expense ratio of 0.35% reflects the operational costs of managing a specialised sector strategy.

Considerations

Expense ratio is notably higher than broader health care alternatives, reducing potential net returns.
Very low dividend yield of 0.36% offers minimal income generation for income-focused investors.
Small maximum position weight of 1.91% indicates significant fragmentation across many holdings.

XLV

Pros

Low expense ratio of 0.08% enhances cost efficiency for long-term health care sector investment.
Large net assets of $43.5 billion ensure high liquidity and tight bid-ask spreads for traders.
Substantial dividend yield of 1.51% provides reliable income distribution from established health care firms.

Considerations

Top holding Eli Lilly accounts for 15.17%, creating considerable concentration risk in a single stock.
Johnson & Johnson represents 10.57% of assets, further increasing reliance on just two mega-cap firms.
Index tracked data is not available, limiting transparency on specific methodology details for some users.

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About XBI and XLV

XBI (XBI)

The SPDR S&P Biotech ETF offers investors access to a broad selection of U.S. biotechnology companies, currently holding approximately 167 stocks. As a Health sector fund, it tracks the performance of the S&P Biotechnology Select Industry Index, which uses equal weighting to give smaller companies a greater influence compared to market-cap weighted indices. With net assets of USD 10.34 billion and an expense ratio of 0.35%, it is a substantial vehicle for sector exposure. The fund currently provides a dividend yield of 0.36%. Biotech is known for its volatility and innovation potential, meaning values can rise and fall significantly. This fund is designed for general educational purposes and does not guarantee returns, so investors should consider their risk tolerance before investing.

XLV (XLV)

Health Care Select Sector SPDR (XLV) is an exchange‑traded fund that provides diversified exposure to large-cap US health‑care companies across pharmaceuticals, biotechnology, medical devices, health‑care providers and insurers. It trades like a stock, offering a simple way to gain sector-specific exposure without selecting individual companies. Investors should note sector concentration risk — performance is tied to regulatory decisions, patent cycles, drug approvals and healthcare spending trends. XLV typically offers broad, liquid exposure and may distribute dividends, but yields and performance fluctuate. Fees for passive sector ETFs are generally low compared with active funds, though expenses reduce long‑term returns. Suitable for investors seeking targeted allocation to the health‑care sector within a diversified portfolio, XLV is not a substitute for personalised advice. This is general educational information only — values can fall as well as rise and past performance is not a reliable indicator of future results.

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XBI vs XLV

Fund Snapshot