PSCH vs XHS

PSCHBInvesco S&P SmallCap Health Care ETF

XHSAState Street SPDR S&P Health Care Services ETF

In short

PSCH Health care, minus the mega-cap pharma giants. PSCH tracks a capped small-cap health care index from the S&P SmallCap 600: roughly 70 companies, same sector as the household-name funds, opposite end of the size spectrum, for 0.29% a year.

XHS Most health care ETFs are pharma funds in disguise. XHS buys the delivery system instead: insurers, hospitals, distributors and clinics, roughly equal weighted so one giant insurer does not run the show.

Stated mandate

PSCH The Fund is based on the S&P SmallCap 600® Capped Health Care Index and normally invests at least 90% of its assets in securities represented by that Index.

XHS The fund seeks to track the total return of the S&P Health Care Services Select Industry Index before fees and expenses, providing targeted exposure to health care services companies.

Why people hold it

• PSCH Charges 0.29% a year, well below the median fee in its broad health care peer group. Cheap access to the small-cap corner of the sector.
• Rules-based and plain: normally at least 90% of assets in the securities of the S&P SmallCap 600 Capped Health Care Index, roughly 70 names, with index caps limiting how large any one position gets.
• Running since 2010, through multiple biotech boom-and-bust cycles, and one of the stronger builds among the two dozen broad health care ETFs we track.

• XHS No drugmakers, no device makers. The index tracks four slices of care delivery: distributors, facilities, health care services and managed care.ssga.com
• Modified equal weighting spreads about 60 names across large, mid and small caps, so the portfolio is not a bet on two or three mega caps.ssga.com
• 0.35% a year sits below the 0.50% median for broad health care ETFs, on a fund that has been running since 2011.
• Ranks in the top quartile of the broad health care ETFs we grade.

Worth knowing

• PSCH Trades lightly next to the mega-cap sector funds, so bid-ask spreads and market impact matter more here, particularly in size or in a fast-moving market.
• Small-cap health care is the jumpy end of the sector, and a roughly 70-stock lineup means single-company news lands harder than in a sprawling mega-cap fund.
• Distributions come once or twice a year, not monthly. This is a sector equity sleeve, not an income-first holding.

• XHS Cheap against the median, not against the giants: XLV, VHT and FHLC charge under a tenth of a percent for cap weighted whole sector exposure.
• Thinly traded next to the big sector funds, so spreads and limit orders matter more here.
• Leaving out pharma and biotech means it moves differently from a whole sector fund, and insurers and hospitals sit close to reimbursement policy.ssga.com

Full PSCH profile⁠

Full XHS profile⁠