Generated October 17, 2026.
Overview
IYH and VHT are both index-tracking healthcare ETFs, but they track different benchmarks and differ significantly in size and cost. IYH follows the Dow Jones U.S. The choice between them hinges on index methodology, expense ratio, and the breadth of healthcare exposure each provides.
How they differ
The biggest difference is cost: VHT's expense ratio of 0.09% is 0.28% lower than IYH's 0.37%, a material gap that compounds over decades. The two track different indexes—Dow Jones versus MSCI—meaning their underlying holdings and sector tilts within healthcare differ, though both aim at U.S. healthcare equities. IYH yields 1.03% while VHT yields 1.18%, a difference that may reflect the composition of each index rather than a structural income strategy. Beta is comparable at 0.52 (IYH) and 0.57 (VHT), suggesting similar sensitivity to broad market moves.
Who each is best for
- IYH: Fits investors who prefer the Dow Jones methodology or want exposure to large-cap healthcare via an established index, and for whom a slightly higher cost is acceptable relative to fund size preferences.
- VHT: Designed for cost-conscious healthcare equity investors seeking broader exposure across the U.S. healthcare market, including mid-cap holdings that the MSCI index includes.
Key risks to know
- Index composition drift: The Dow Jones and MSCI indexes weight and select healthcare holdings differently. Investors should verify whether the index composition aligns with their healthcare thematic view (e.g., pharma vs. medical devices vs. biotech balance).
- Healthcare sector concentration: Both ETFs concentrate solely on healthcare equities, creating sector-level risk if healthcare underperforms the broader market or faces regulatory headwinds (drug pricing legislation, reimbursement cuts).
- Large-cap and mid-cap sensitivity: VHT's broader market-cap inclusion (via the MSCI methodology) may behave differently than IYH in environments favoring or penalizing mid-size healthcare firms versus large-cap peers.
- Cyclical earnings exposure: Healthcare equities, though often viewed as defensive, are sensitive to interest-rate shifts, M&A activity, and patent cliff events that can create volatility.
Bottom line
If cost and asset base are primary drivers, VHT's 0.09% expense ratio and $18.9B in AUM stand out clearly. Past performance does not predict future results, and the choice should rest on which underlying index better matches your view of healthcare market structure.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
