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Health care funds trail the S&P 500 this year

XLV, the fund of the S&P 500's health-care companies, gained 9.3% including dividends through Tuesday, October 6, 2026, against 15.1% for SPY.

· 3 min read · ETF.net Research

A researcher wearing blue gloves uses a multichannel pipette to dispense liquid into a microplate.

Key takeaways

  • XLV beat the market in only one stretch.
  • Four October sessions opened much of the year's gap.
  • Weighting each company the same changed the year.
  • XLV's device names did not move with its drug makers.

Health-care funds trailed a strong stock market this year. XLV, which owns the health-care companies in the S&P 500, rose 9.3% through Tuesday, October 6, including dividends. SPY, which owns the S&P 500, rose 15.1%. The median fund gained 9.8%.

About $85.5 billion sits in these funds. Half of it is in XLV.

Over the past year XLV gained 17.9%, a little ahead of SPY's 17.3%.

In the share price, the first quarter was a loss for both, 5.3% for XLV and 4.6% for SPY. From the end of March to the end of June, XLV rose 8.2% and SPY rose 14.8%. SPY rose more.

In the quarter that ended Wednesday, September 30, XLV rose 6.2% and SPY rose 2.1%.

In the four sessions after that, SPY's share price rose 2.2% and XLV's fell 0.8%. About half of the gap between XLV and SPY this year opened in those four sessions.

XLV beat SPY in only one stretch this year

XLV and SPY share-price returns, Dec. 31, 2025 through Oct. 6, 2026

  • XLV
  • SPY
  • Q1
    • XLV −5.3%
    • SPY −4.6%
  • Q2
    • XLV +8.2%
    • SPY +15%
  • Q3
    • XLV +6.2%
    • SPY +2.1%
  • Oct 1–6
    • XLV −0.8%
    • SPY +2.2%

The first week of October undid most of that Q3 lead.

On Tuesday, January 27, UnitedHealth fell 19.6% after forecasting a 2% drop in revenue, its first yearly decline in nearly four decades. A day earlier, the Centers for Medicare & Medicaid Services had proposed raising 2027 payments to Medicare Advantage plans, the private plans that cover Medicare patients, by 0.09%, against the 4% to 6% analysts expected. XLV fell 1.7% that day.

On Monday, April 6, CMS set the final increase at 2.48%, more than $13 billion. UnitedHealth rose 9.4% on Tuesday, April 7. XLV rose 0.2%.

The large drug makers had a better year

J.P. Morgan said US large-cap biopharma had gained 22% this year through Wednesday, September 2, against 14% for the S&P 500.

XLV holds 61 stocks. Eli Lilly is 15% of the fund, and the ten largest holdings are 60%. Lilly rose 8% this year. Merck rose 35%. Johnson & Johnson rose 23%. AbbVie rose 17%. UnitedHealth rose 14%.

VHT, Vanguard's broader health-care fund, holds 411 stocks and charges 0.09% a year. XLV charges 0.08%. Together the two hold 76% of the money in these funds.

FHLC, Fidelity's fund, holds 365 stocks at 0.08%. Lilly is 13% of VHT and 13% of FHLC. VHT rose 9.8%, the same as the median fund. FHLC rose 9.9%.

IYH, another US health-care fund, from iShares, charges 0.37% and rose 9.5%. Lilly is 15% of IYH.

Equal weight and the device stocks

RSPH holds those same S&P 500 health-care stocks, gives each one the same weight, and resets those weights every quarter. It charges 0.4%. It rose 16.7% this year, 7.4 percentage points ahead of XLV, and 23.1% over the past year.

Moderna's share price is more than six times what it was at the start of the year. RSPH starts each stock equal and lets prices move the weights until the next quarterly reset, so a winner can become the largest holding. Moderna is 2.4% of the fund now. At the end of August it was 4.4%. XLV holds the same stock at 1.2%.

IHI, a fund of US medical-device makers, fell 17.7% this year. Abbott Laboratories, its largest holding, fell 22%. Intuitive Surgical fell 29%. In XLV, Abbott is 2.8% and Intuitive Surgical is 2.4%.

XLV's device names fell; its other large holdings rose

Share-price return through Oct. 6, 2026

  • MRK+35%
  • JNJ+23%
  • ABBV+17%
  • UNH+14%
  • LLY+7.7%
  • ABT−22%
  • ISRG−29%

Lilly, the biggest weight, trailed Merck, J&J, AbbVie and UnitedHealth.

IXJ adds health-care companies outside the United States and charges 0.38%. It rose 5% this year, behind XLV, VHT and FHLC. Lilly is still its largest stock.

Equal-weight beat SPY; the size-weighted funds did not

Total return through Oct. 6, 2026

  • RSPH+17%
  • SPY+15%
  • FHLC+9.9%
  • VHT+9.8%
  • IYH+9.5%
  • XLV+9.3%
  • IXJ+5.0%
  • IHI−18%

XLV, VHT, FHLC and IYH finished within a point of one another.

The funds that weight each company by its market value had the same year. The large drug makers, as a group, had a better year.

ETFs in this story

AXLVState Street Health Care Select Sector SPDR ETF84/100ASPYState Street SPDR S&P 500 ETF72/100BRSPHInvesco S&P 500 Equal Weight Health Care ETF67/100BIHIiShares U.S. Medical Devices ETF58/100AVHTVanguard Health Care ETF76/100

Frequently asked questions

How far behind are health-care funds?

XLV gained 9.3% including dividends through October 6, against 15.1% for SPY, and the median fund gained 9.8%.

Did they trail over the past year too?

Over the past year XLV gained 17.9%, a little ahead of SPY's 17.3%.

Did every health-care fund trail the S&P 500?

RSPH rose 16.7% and beat SPY, while the size-weighted funds did not.

When did the gap with the S&P 500 open?

About half of the gap between XLV and SPY this year opened in the four sessions after September 30.

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