VanEck's 26 Pharma Stocks vs Fidelity's 334-Name Health Fund
Two health care ETFs, two opposite designs: 26 pharma names against 334 holdings. The concentrated fund has won the last five years — and it is paying for that with cost and volatility.
VanEck's concentrated 26-stock pharmaceutical ETF (PPH) has outperformed Fidelity's 334-holding broad health care ETF (FHLC) over the past five years while charging more and moving more sharply, and on Aug. 26, 2026 PPH traded at 116.23, down 1.39%, against FHLC at 84.25, down 0.89%.
Health care investors buying an index fund are really making a single decision before any other: how many companies do they want to own? The two funds in question sit at opposite ends of that question. VanEck's pharmaceutical ETF (PPH) holds 26 stocks. Fidelity's broad health care ETF (FHLC) holds 334. Everything else — the cost, the volatility, the five-year return gap — follows from that one design choice.
Over the past five years the concentrated fund has come out ahead, according to Motley Fool, but it has charged more to get there and delivered a bumpier ride along the way. That is the trade in one sentence, and it is worth unpacking, because the two funds are not really substitutes for one another.
Twenty-six names against three hundred and thirty-four
The arithmetic of concentration is unforgiving. With 26 positions, a single large drug company can carry — or sink — a meaningful slice of the portfolio. A pipeline failure, a patent cliff, a surprise regulatory decision at one of the top holdings shows up immediately in the fund's price. With 334 holdings, roughly 12.8 times as many names on an illustrative basis, the same event is diluted to a rounding error.
The breadth difference is not only about count. Fidelity's fund reaches across the whole health care sector: medical devices, managed care and insurers, hospitals and providers, life-science tools and diagnostics, alongside the drugmakers. VanEck's fund is a pharmaceutical bet, full stop. When device makers rally and pharma lags, the two funds diverge — and that divergence is the product working as designed, not a tracking error.
That distinction matters for anyone who already owns a broad market index fund. A total-market or S&P 500 position already carries substantial health care weight through its largest constituents. Adding FHLC on top mostly deepens exposure the investor already has. Adding PPH does something different: it tilts hard toward a single sub-industry with its own drivers — drug pricing policy, patent expirations, clinical readouts, and the pace of approvals.
What the tape showed on Aug. 26
Intraday on Wednesday, Aug. 26, 2026, at 13:53:45 GMT, PPH changed hands at 116.23, down 1.39% from its prior close of 117.87, with a session range of 115.87 to 117.49. FHLC traded at 84.25, down 0.89% from 85.01, in a range of 84.23 to 84.73. Both were quoted while the market was open, so those are live prices rather than settled closes.
Set that against a broad market that was essentially motionless. The S&P 500 tracker (SPY) sat at $766.12, up 0.03%. The Nasdaq 100 fund (QQQ) was at $711.08, up 0.05%. The Dow tracker (DIA) was at $535.09, down 0.03%. So health care was the day's laggard in a flat tape, and within health care the pharma-only fund fell harder — a gap of about 0.50 percentage points between the two ETFs on the session, and roughly 1.42 percentage points between PPH and the S&P 500 tracker.
One session proves nothing on its own. But it is a clean, small illustration of the volatility point: on a day when the sector sold off modestly, the 26-stock fund moved appreciably more than the 334-stock fund. Multiply that pattern across hundreds of trading days and you have the higher volatility the five-year record reflects — in both directions, which is precisely why the concentrated fund led over the period.
The cost line is the one you control
Expense ratios are the only variable in this comparison that is known in advance. Returns are not. Volatility is not. The fee is contractual, it compounds silently, and it is deducted whether the fund goes up or down. The concentrated VanEck product carries the steeper charge of the two, which means it has to out-earn the Fidelity fund by that margin every year just to draw level before any skill or luck is measured.
Expense ratios are the only variable in this comparison that is known in advance.
The defensible argument for paying more is that you are buying something you cannot cheaply replicate: a tightly focused pharmaceutical basket with meaningful non-U.S. drugmaker exposure that a cap-weighted domestic health care index will not deliver. The indefensible version is paying up for concentration you could construct yourself by holding three or four large pharma names directly and skipping the fee entirely.
Broad sector funds compete almost purely on cost, because their holdings are near-identical across issuers. Concentrated thematic funds compete on the theme. That is why the pricing gap exists, and why the burden of proof sits with the more expensive product over a full cycle rather than a favourable five-year window.
Matching the fund to the investor, not the other way round
The broad fund fits an investor who wants health care as a durable allocation sleeve — demographics, chronic disease, medical technology, the whole apparatus — and who does not want to guess which corner of it leads next. It is the lower-maintenance choice, and its 334 holdings mean a single company's bad news rarely reaches the bottom line.
The pharma fund fits an investor with a specific view: that drug developers are where the sector's economics are concentrated, that pricing pressure is manageable, and that the next leg of returns comes from patents and pipelines rather than from hospital utilisation or device volumes. That investor should size the position accordingly. Concentration is a deliberate risk, not an accident, and it should be paid for out of the speculative part of a portfolio rather than the core.
A five-year lead is real evidence but it is also a specific window, and it captures whatever happened to favour large drugmakers over that stretch. Rotate the start date and the ranking can reverse. That is the nature of a 26-stock portfolio: it wins bigger and loses bigger, and the past-performance line at the bottom of every fund page exists for exactly this comparison.
What to watch from here
Three things will decide whether the concentrated fund keeps its edge. First, drug pricing and reimbursement policy, which lands squarely on pharma and only glancingly on devices and tools. Second, the patent calendar at the fund's largest positions — with 26 names, a single major expiry is a portfolio event. Third, relative performance within the sector: if managed care, diagnostics or medical technology take the lead, the broader Fidelity fund captures it automatically while the pharma fund simply misses it.
For anyone weighing the two today, the honest framing is not which fund is better. It is whether you are expressing a view on pharmaceuticals specifically, or buying health care as a whole. Answer that first, and the fee and volatility questions largely answer themselves.
Key facts
- PPH (VanEck, 26 holdings): 116.23, -1.39%, as of 13:53:45 GMT Aug 26, 2026
- FHLC (Fidelity, 334 holdings): 84.25, -0.89%, as of 13:53:45 GMT Aug 26, 2026
- Five-year record: VanEck's concentrated fund has outpaced Fidelity's broader fund
- Trade-off: Higher expense ratio and higher volatility on the concentrated fund
Frequently asked questions
How many stocks does each ETF hold?
VanEck's pharmaceutical ETF (PPH) holds a concentrated portfolio of 26 stocks. Fidelity's broad health care ETF (FHLC) holds 334. That roughly 12.8-to-1 difference in holdings count is the core distinction between the two funds and drives most of the gap in their cost, volatility and return behaviour.
Which fund has performed better recently?
Over the past five years the VanEck concentrated pharmaceutical fund has outpaced the broader Fidelity health care fund. However, it has done so while charging a higher expense ratio and exhibiting greater volatility, meaning the outperformance came with more risk and a larger ongoing cost drag on returns.
What were the two ETFs trading at on Aug. 26, 2026?
As of the last trade at 13:53:45 GMT on Wednesday, Aug. 26, 2026, PPH was quoted at 116.23, down 1.39% from a prior close of 117.87. FHLC was at 84.25, down 0.89% from 85.01. Both were live intraday prices with the market open.
Why is the concentrated fund more volatile?
With only 26 holdings, each position carries substantial weight. A patent expiry, a failed trial or an adverse regulatory decision at one large drugmaker moves the whole fund. In a 334-holding portfolio spanning devices, insurers, providers and tools alongside pharma, the same single-company event is heavily diluted.
Does a broad health care ETF duplicate what an index fund already owns?
Partly. A total-market or S&P 500 fund already carries meaningful health care weight through its largest constituents, so a broad sector ETF mainly deepens existing exposure. A pharma-only fund does something different — it tilts toward one sub-industry with its own drivers, including drug pricing policy and pipeline outcomes.
How did health care compare with the broad market that day?
The broad market was nearly flat. SPY traded at $766.12, up 0.03%; QQQ at $711.08, up 0.05%; DIA at $535.09, down 0.03%. Both health care ETFs fell, with PPH's 1.39% decline about 1.42 percentage points below the S&P 500 tracker on the session.
Sources
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