Assessing IHE and IXJ: Which Healthcare ETF Offers Superior Investment Potential?

Key Points

• iShares Global Healthcare ETF offers exposure to 110 international stocks, while iShares U.S. Pharmaceuticals ETF focuses on 56 domestic companies

• iShares U.S. Pharmaceuticals ETF exhibits higher concentration risk, as its two largest holdings represent more than 43% of the portfolio

• iShares U.S. Pharmaceuticals ETF has outperformed iShares Global Healthcare ETF on both one‑year and five‑year total‑return bases

Investors evaluating the iShares U.S. Pharmaceuticals ETF (NYSEMKT:IHE) and the iShares Global Healthcare ETF (NYSEMKT:IXJ) must decide between focused exposure to the U.S. pharmaceutical sector and a more diversified, global healthcare approach.

Snapshot (cost & size)

MetricIHEIXJIssueriSharesiSharesShare price$100.13 (as of 2026-07-16)$99.67 (as of 2026-07-16)Expense ratio0.38%0.40%1-yr return (as of July 16, 2026)50.30%18.20%Dividend yield1.44%1.46%AUM$1.4B$4.1B

The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Although the expense ratio difference is modest — 0.38% for IHE versus 0.40% for IXJ — the variation can affect long‑term compounding. Both funds yield approximately 1.5%, so lower fees become a key consideration for investors prioritizing cost efficiency.

Performance & risk comparison

MetricIHEIXJMax drawdown (5 yr)(16.00%)(18.10%)Growth of $1,000 over 5 years (total return)$1,762$1,269

What’s inside

The iShares Global Healthcare ETF, with $4.1 billion in assets under management, offers greater liquidity than its counterpart. Its top holdings comprise Eli Lilly (NYSE:LLY) at 10.61%, Johnson & Johnson (NYSE:JNJ) at 6.89%, and AbbVie (NYSE:ABBV) at 5.00%. The fund maintains 100% exposure to the healthcare sector across 110 holdings. Launched in 2001, it has distributed $1.44 per share over the trailing twelve months, yielding a 1.44% return on its recent share price of approximately $99.67.

The iShares U.S. Pharmaceuticals ETF, managing $1.4 billion in assets under management, is smaller yet highly specialized. It holds just 56 stocks, resulting in higher concentration; its largest positions are Johnson & Johnson at 21.81%, Eli Lilly at 21.44%, and Bristol Myers Squibb (NYSE:BMY) at 4.45%. The fund provides 100% exposure to the U.S. pharmaceutical sector and was launched in 2006. It has distributed $1.47 per share over the trailing twelve months, yielding a 1.47% return on its recent share price of roughly $100.13.

What it means for investors

Investors seeking diversification may prefer to avoid the iShares U.S. Pharmaceuticals ETF, as its underlying index is heavily weighted toward its two largest holdings — Johnson & Johnson and Eli Lilly — representing 21.8% and 21.4% of assets, respectively.

The iShares Global Healthcare ETF provides broader geographic and sector diversification. Two of its top ten holdings are not pharmaceutical companies, and its second‑largest holding, Johnson & Johnson, derives more than one‑third of its revenue from medical devices.

Although the IHE ETF has outperformed in recent years, its outsized gains stem largely from the strong performance of GLP‑1‑targeting weight‑loss therapeutics.

The IXJ index benefits from exposure to insurance providers and medical‑technology manufacturers, making it less vulnerable to underperformance from a single issue, such as competition from lower‑cost biosimilars of popular GLP‑1 treatments.

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