Key Points
IHE pays a meaningfully higher dividend yield than BBH.
BBH offers more concentrated exposure with 25 holdings, compared to 56 for IHE.
Over the past five years, IHE has shown lower price volatility and experienced a much smaller maximum drawdown than BBH.
Comparing the iShares U.S. Pharmaceuticals ETF (NYSEMKT:IHE) and the VanEck Biotech ETF (NASDAQ:BBH) reveals two distinct fund profiles. IHE tracks established, blue chip pharmaceutical companies, while BBH zeroes in on the research-intensive biotech space. Here's how those different strategies stack up in terms of cost, yield, and risk.
Snapshot (cost & size)
| Metric | BBH | IHE |
|---|---|---|
| Issuer | VanEck | iShares |
| Expense ratio | 0.35% | 0.38% |
| 1-year return (as of July 17, 2026) | 30.31% | 52.49% |
| Dividend yield | 0.47% | 1.48% |
| Beta | 0.56 | 0.51 |
| AUM | $395.6 million | $1.1 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The two funds are priced competitively -- BBH carries a 0.35% expense ratio, while IHE charges 0.38%. There’s a bigger difference when it comes to income. IHE offers a notably higher yield, with a full 1-percentage-point advantage over BBH.
Performance & risk comparison
| Metric | BBH | IHE |
|---|---|---|
| Max drawdown (5 yr) | (39.86%) | (16.02%) |
| Growth of $1,000 over 5 years (total return) | $1,054 | $1,776 |
What's inside
Launched in 2006, IHE tracks a benchmark of domestic pharmaceutical stocks and currently holds 56 different securities. Its largest positions include Johnson & Johnson (NYSE:JNJ) at 22.44%, Eli Lilly (NYSE:LLY) at 22.3%, and Merck (NYSE:MRK) at 4.6%. By focusing on mature pharmaceutical firms, the fund offers a healthcare portfolio with lower price volatility than pure-play biotech funds.
BBH aims to replicate the MVIS US Listed Biotech 25 Index, maintaining a lean portfolio of just 25 stocks. Its top holdings include Amgen (NASDAQ:AMGN) at 15.1%, Gilead Sciences (NASDAQ:GILD) at 12.8%, and Vertex Pharmaceuticals (NASDAQ:VRTX) at 9.1%. The fund specifically targets companies involved in genetic research and diagnostic technologies. BBH launched in 2011.
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What this means for investors
Choosing between these two ETFs is really a question of what role you want a healthcare fund to play in your portfolio.
IHE is built for investors who want blue chip stability: its top two holdings alone, Johnson & Johnson and Eli Lilly, make up nearly 45% of the fund. This is a concentrated bet on a group of proven, profitable drugmakers with diversified revenue streams. That's a big part of why it has held up better historically during downturns and pays a more attractive dividend.
BBH, by contrast, is a purer growth play. Biotech companies often plow profits back into research rather than paying dividends, and their stock prices can swing sharply on a single clinical trial result or regulatory decision. That volatility cuts both ways -- it's what creates the upside potential that draws investors to biotech in the first place, but it also means BBH is a bumpier ride.
Neither approach is inherently better. Income-focused or more conservative investors may prefer IHE's steadier profile, while those comfortable with added risk in exchange for greater upside potential might lean toward BBH. Some investors might even split the difference by holding a bit of both, pairing pharma's stability with biotech's growth potential as part of a broader healthcare allocation.
Andy Gould has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Amgen, Eli Lilly, Gilead Sciences, Merck, and Vertex Pharmaceuticals. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.