SPDR S&P Pharmaceuticals ETF Outperforms Biotech Counterparts with Lower Costs and Stronger Returns
Key Insights
The SPDR S&P Pharmaceuticals ETF (XPH) delivered a 38.00% one-year total return as of June 3, 2026, outperforming the First Trust NYSE Arca Biotech ETF (FBT) at 35.90%.
XPH carries a lower expense ratio of 0.35% compared to FBT's 0.55%, offering a cost advantage for long-term investors in the pharmaceutical space.
Both ETFs concentrate 42% of assets in their top 10 holdings, with Corcept Therapeutics appearing as a top-10 position in each fund.
The SPDR S&P Pharmaceuticals ETF (NYSEMKT: XPH) has emerged as a compelling option for healthcare investors, posting a 38.00% one-year total return as of June 3, 2026, while maintaining a lower expense ratio than competing biotechnology-focused funds. The performance data, drawn from recent ETF comparisons, underscores the divergence between established pharmaceutical manufacturers and the more volatile biotechnology sub-sector.
The SPDR fund, which tracks the pharmaceutical segment of the S&P Total Market Index, holds 59 positions across various market capitalizations. Its largest holdings include Organon & Co (NYSE: OGN) at 3.97%, Corcept Therapeutics (NASDAQ: CORT) at 3.74%, and Liquidia (search) (NASDAQ: LQDA) at 2.91%. Launched in 2006, the fund tracks a modified equal-weighted index and distributed $0.37 per share over the trailing 12 months.
Cost and Performance Dynamics
Expense ratios represent a critical differentiator among healthcare ETFs. XPH carries a 0.35% expense ratio, notably lower than the 0.55% charged by the First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT: FBT). Over extended holding periods, this 0.20 percentage point gap can meaningfully impact compounding returns for cost-conscious investors.
The First Trust Biotech fund, which tracks an index of 30 biotechnology companies, delivered a 35.90% one-year return over the same period. Its concentrated portfolio features Corcept Therapeutics at 4.97%, Bruker (NASDAQ: BRKR) at 4.70%, and Veracyte (NASDAQ: VCYT) at 4.47%. Despite the narrower focus, both ETFs allocate 42% of assets to their top 10 holdings, meaning performance in each fund is driven by a relatively small number of names.
Over a five-year horizon, XPH generated total returns of $1,188 on a $1,000 initial investment, compared to $1,370 for FBT. The SPDR fund experienced a maximum drawdown of 31.60% over five years, slightly worse than FBT's 30.00% decline. Both funds exhibit below-market beta: XPH at 0.61 and FBT at 0.68, indicating lower price volatility relative to the S&P 500.
The Broader Biotech Landscape
The State Street SPDR S&P Biotech ETF (NYSEMKT: XBI) provides an even broader view of the biotechnology sub-sector with 151 holdings. Its largest positions include Revolution Medicines (NASDAQ: RVMD) at 1.83%, Twist Bioscience Corp (NASDAQ: TWST) at 1.80%, and Alkermes (NASDAQ: ALKS) at 1.79%. XBI posted a striking 58.30% one-year return, significantly outpacing both pharmaceutical-focused funds.
However, this performance comes with substantially higher risk. XBI's five-year maximum drawdown reached 54.70%, and a $1,000 investment five years ago would have grown to just $1,030. The fund's beta of 0.85 reflects greater sensitivity to market movements. As the analysis notes, the biotech sector is notoriously volatile, with company prospects rising and falling based on clinical test data and regulatory decisions.
Pharmaceutical Stability Versus Biotech Growth
The Invesco Pharmaceuticals ETF (NYSEMKT: PJP) offers another pharmaceutical-focused alternative with 30 holdings, including Corcept Therapeutics at 5.67%, Eli Lilly & Co (NYSE: LLY) at 5.36%, and AbbVie (search) (NYSE: ABBV) at 4.94%. PJP delivered a 34.70% one-year return with a notably low beta of 0.47 and a maximum drawdown of just 17.50% over five years. Over 21 years, PJP has generated a total return of 851%, equating to a compound annual growth rate of 11.4%, slightly ahead of the S&P 500's 827% return and 11.2% CAGR over the same period.
The dividend profiles also differ meaningfully. XPH offers a 0.70% trailing-12-month distribution yield, while PJP provides a 1.00% yield. FBT pays no dividend, and XBI yields just 0.30%. For income-oriented investors, these distinctions carry tax implications depending on the account type in which the ETF is held.
With its combination of lower fees, competitive returns, and a modest dividend, the SPDR S&P Pharmaceuticals ETF presents a balanced proposition for investors seeking healthcare exposure without the extreme volatility characteristic of the biotechnology sub-sector.