Eli Lilly is 15% of the biggest health care ETF

Ten companies accounted for 60.8% of the largest health care fund on Thursday, September 24. State Street's fund for the health care companies in the S&P 500, AXLV, held 61 stocks. Five of them, Eli Lilly, Johnson & Johnson, AbbVie, Merck and UnitedHealth, accounted for 44.6%.

The fund tracks the Health Care Select Sector Index, State Street's representation of that S&P 500 sector, before fees. Assets were $43.3 billion. As of Wednesday, pharmaceuticals were 37.1% of the fund and biotechnology was 19.7%. Providers, device makers and lab-tool companies made up most of the rest.

A holder of the S&P 500 fund, SPY, already owns health care companies. They were 9.3% of that fund on Thursday. The Nasdaq-100 fund, QQQ, had 3.9% in health care. Adding AXLV to SPY adds a larger stake in companies the S&P 500 fund already holds.

This year, equal weight led

The returns in this piece run through Thursday's close, and they include dividends reinvested.

AXLV returned 11.1% this year. Lilly's stock returned 10.5%. Over the same days the S&P 500 fund returned 13.4%, and the Nasdaq-100 fund returned 21.0%.

Invesco's BRSPH gives each S&P 500 health care company the same weight and resets those weights each quarter. It held $861 million. On an average day, $4.8 million of it changes hands, against $1.6 billion for AXLV. The fee is 0.40% a year, five times AXLV's 0.08%. The fund shares 57 companies with AXLV. It returned 17.1% this year, 6.0 percentage points ahead of AXLV and ahead of the S&P 500 fund.

On Thursday Lilly was 1.7% of BRSPH and 15.0% of AXLV, and the stock's 10.5% gain sat beside the big fund's 11.1%. That weight cannot explain a gap of 6.0 percentage points.

Moderna started the year as a small line in the big fund. At the end of 2025, the fund's own filing put the stock at 0.18% of AXLV. From then through Thursday the shares rose 561%, and that year-end stake is 1.0 percentage point of the fund's gain. By Thursday the weight was 1.1%. In BRSPH the same stock was the largest holding, at 2.2%, and the top ten held 18.9%. That 1.0 percentage point is what the cap-weighted fund got from the stock. The gap between the funds is 6.0 percentage points.

First Trust's BFXH led too. It tracks the StrataQuant Health Care Index, which ranks Russell 1000 health care stocks on growth and value measures, keeps the higher-ranked names, gives the top ranks more weight, and rebuilds quarterly. On Thursday the largest holding was Natera, at 3.2%. The fund returned 15.3% this year, 4.2 percentage points ahead of AXLV.

More stocks, the same giants

Vanguard's AVHT is the large fund that reaches past the S&P 500. It tracks the MSCI US Investable Market Health Care 25/50 Index, a list of U.S. health care companies from large to small, and it ordinarily holds the stocks in that index. Vanguard reported $19.3 billion in the ETF at the end of August. On Thursday the fund listed 411 holdings. Lilly was still 12.8%, and the top ten were still 51.6%.

Sixty companies sit in both AVHT and AXLV. About 85% of the weight in the two funds lands on the same stocks. This year AVHT returned 11.8%, less than a percentage point ahead of AXLV. Fidelity's broad fund, FHLC, and iShares' large-company fund, IYH, hold the same giants at the top.

Where a shock lands

Lilly's place in the fund is the company's size in the sector. On August 5, Lilly reported second-quarter revenue of $23.0 billion, against $15.6 billion a year earlier. Two drugs, Mounjaro and Zepbound, brought in $9.9 billion and $4.9 billion, against $5.2 billion and $3.4 billion a year earlier. Together they were 65% of the quarter's revenue. A 15.0% weight rises and falls with those sales. The 1.7% weight in BRSPH moves less.

UnitedHealth was 5.4% of AXLV. On January 26, the Centers for Medicare and Medicaid Services, the U.S. agency that runs Medicare, proposed an average payment increase of 0.09% for 2027 for Medicare Advantage, the private-plan version of Medicare. UnitedHealth, CVS and Humana shares fell between 8% and 13% on that proposal. In April the agency projected a 2.48% increase for 2027 against the 2026 base, more than $13 billion in payments to plans.

The wider window

Over the twelve months through Thursday, AXLV returned 26.6%, ahead of the S&P 500 fund's 17.3%, and BRSPH returned 29.2%. Lilly's stock returned 60.3%, ahead of AXLV.

Over the three years through Thursday, AXLV returned 37.2% and BRSPH returned 37.7%. The S&P 500 fund returned 84.8%, and the Nasdaq-100 fund returned 110.6%.

Half a percentage point separated the two health care rules. Equal weight led this year, and a 15% stake in Lilly was not why. Over those three years, what separated the two funds from the S&P 500 fund was the sector.