XLV vs. PJP: How Broad Healthcare Diversification Stacks Up to Pharma Stocks
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 (XLV -0.64%) provides broad, low-cost exposure to the total healthcare sector, while the Invesco Pharmaceuticals ETF (PJP -1.50%) 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.
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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.
