"Healthcare isn't going anywhere. An aging population, chronic disease management, and breakthrough treatments ensure this sector remains essential regardless of market conditions. Health Care Select Sector SPDR Fund ( NYSEARCA:XLV) offers concentrated exposure to this defensive sector, but with concentration comes tradeoffs investors must understand before allocating capital. Pure Healthcare Exposure With Mega-Cap Anchors XLV functions as a single-sector bet on American healthcare, holding 60 companies across pharmaceuticals, medical devices, and healthcare services."
"The fund's massive $41 billion asset base enables institutional-grade pricing through an 0.08% expense ratio, making it one of the most cost-efficient healthcare vehicles available. Its modest 1.62% dividend yield signals a growth orientation rather than income generation, as the fund prioritizes capital appreciation from innovation and market expansion. The fund's return engine relies on the profitability and innovation of its underlying companies."
"Top holdings reveal the fund's bet on established leaders, with Eli Lilly ( NYSE:LLY) commanding 14.45% of the portfolio, driven by blockbuster obesity and diabetes treatments that generated $19.29 billion in Q4 2025 revenue. Johnson & Johnson ( NYSE:JNJ) follows at 10.19%, with shares surging 59.54% over the past year. The top three holdings alone represent nearly one-third of fund assets."
XLV delivers pure U.S. healthcare exposure by allocating 99.4% of assets across 60 companies in pharmaceuticals, medical devices, and healthcare services. The $41 billion fund charges an 0.08% expense ratio and yields 1.62%, reflecting a focus on capital appreciation over income. Returns are driven by drug sales, patent protection, procedural volumes, technological advancement, and managed-care margins. Mega-cap leaders dominate the portfolio, with Eli Lilly and Johnson & Johnson representing large individual stakes and the top three holdings nearing one-third of assets. XLV returned 9.59% over the past year, trailing the broader S&P 500 benchmark.
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