FHLC vs FXH

FHLCAFidelity MSCI Health Care Index ETF

FXHBFirst Trust Health Care AlphaDEX Fund

In short

FHLC Health care, whole market. FHLC tracks an MSCI index that runs from mega-cap pharma down to small-cap biotech and device makers, roughly 400 names, for 0.08% a year.

FXH A 2007-vintage twist on health care: instead of owning the whole sector, FXH runs Russell 1000 health care names through First Trust's AlphaDEX growth-and-value screen and holds roughly 80 of them.

Stated mandate

FHLC The fund seeks to track the performance of the MSCI USA IMI Health Care Index before fees and expenses.

FXH The fund seeks before-fee results generally corresponding to the price and yield of the StrataQuant® Health Care Index. That index uses the AlphaDEX® methodology to select and weight health care stocks from the Russell 1000® Index.

Why people hold it

• FHLC Charges 0.08% a year against a 0.50% median for broad health care ETFs. Only XLV matches that sticker; VHT sits a hair above.
• The IMI index it follows reaches for about 99% of US free-float market value, so smaller biotech and device names ride along with the pharma giants.msci.com
• Mirrors its benchmark closely, one of the tighter tracking jobs among broad health care funds. Distributions come quarterly.
• Fidelity has run it since 2013, and it has grown into a multi-billion-dollar fund with a plain vanilla index mandate.fidelity.com

• FXH AlphaDEX selects and weights health care stocks from the Russell 1000 using growth and value marks. A published rules screen, not a manager's hunch.ftportfolios.com
• Live since 2007 and now a multi-billion-dollar fund. This is a long-running strategy with a real record, not a recent launch chasing a theme.
• A focused book of about 80 stocks, so the screen's picks actually show up in results rather than getting diluted across the full sector. Pays quarterly.

Worth knowing

• FHLC One sector, one country. Drug-pricing politics, patent cliffs and FDA rulings move the whole portfolio at once.
• Free-float cap weighting means a handful of mega-cap insurers and drugmakers carry most of the weight; that long tail of small names counts for less than it looks.msci.com
• Moderately traded rather than the category's volume leader, so spreads matter more on large or hurried orders.

• FXH The 0.61% fee runs near double the typical multifactor fund's. Cheap core peers like IUSG and VONV charge a small fraction of it.
• Thinly traded for its size, so spreads can widen and fills on a market order may land away from the fund's underlying value.
• Fee load and volatility profile leave it in the bottom quartile of its multifactor peer group, a group topped by broad, low-cost core funds.

Full FHLC profile⁠

Full FXH profile⁠