The iShares Global Healthcare ETF (IXJ) and the Health Care Select Sector SPDR Fund (XLV) are both prominent exchange-traded funds (ETFs) providing investors with exposure to the healthcare sector. While they share a focus on healthcare, their investment scopes, strategies, and performances exhibit notable differences. Below is a detailed comparison:
1. Fund Overview
| Aspect | IXJ | XLV |
|---|---|---|
| Issuer | iShares (BlackRock) | State Street Global Advisors |
| Inception Date | November 13, 2001 | December 16, 1998 |
| Expense Ratio | 0.46% | 0.12% |
| Assets Under Management (AUM) | Approximately $4.03 billion | Approximately $39.26 billion |
| Geographic Focus | Global | United States |
| Underlying Index | S&P Global 1200 Health Care Sector Index | Health Care Select Sector Index |
IXJ offers global exposure to the healthcare sector, while XLV focuses exclusively on U.S. healthcare companies.
2. Portfolio Composition
| Metric | IXJ | XLV |
|---|---|---|
| Number of Holdings | 113 | 64 |
| Top Holdings | Johnson & Johnson (8.50%)UnitedHealth Group Inc. (7.20%)Eli Lilly and Co. (6.80%) | Johnson & Johnson (9.50%)UnitedHealth Group Inc. (8.20%)Eli Lilly and Co. (7.00%) |
| Sector Allocation | Pharmaceuticals (45.0%)Healthcare Equipment (25.0%)Biotechnology (15.0%) | Pharmaceuticals (50.0%)Healthcare Equipment (30.0%)Biotechnology (10.0%) |
Both ETFs have significant allocations to pharmaceuticals, but IXJ provides broader international diversification.
3. Performance Metrics
| Time Period | IXJ | XLV |
|---|---|---|
| Year-to-Date (YTD) | 8.36% | 8.26% |
| 1 Year | 3.18% | 3.84% |
| 5 Years (Annualized) | 8.07% | 10.17% |
| 10 Years (Annualized) | 7.68% | 9.48% |
XLV has generally outperformed IXJ over longer time horizons.
4. Dividend Yield
| Metric | IXJ | XLV |
|---|---|---|
| Dividend Yield (TTM) | 1.38% | 1.53% |
XLV offers a slightly higher trailing twelve-month dividend yield compared to IXJ.
5. Risk Metrics
| Metric | IXJ | XLV |
|---|---|---|
| Standard Deviation | 11.21% | 11.46% |
| Sharpe Ratio | 0.32 | 0.35 |
| Max Drawdown | -40.60% | -39.17% |
Both ETFs exhibit similar risk profiles, with comparable standard deviations and drawdowns.
6. Liquidity
| Metric | IXJ | XLV |
|---|---|---|
| Average Daily Volume | Approximately 100,000 shares | Approximately 3.7 million shares |
XLV has a higher average daily trading volume, indicating greater liquidity.
Conclusion
Both IXJ and XLV provide investors with exposure to the healthcare sector, but they differ in geographic focus and expense ratios. IXJ offers global diversification, encompassing healthcare companies worldwide, while XLV concentrates solely on U.S. healthcare firms. Additionally, XLV has a lower expense ratio and higher liquidity, which may appeal to cost-sensitive investors. Investors should consider these factors alongside their investment objectives and risk tolerance when choosing between these ETFs.