Which Is the Better Invesco Healthcare ETF: Equal-Weight RSPH or Biotech-Focused IBBQ?

Written by Sara Appino for The Motley Fool->

Invesco Nasdaq Biotechnology ETF has a lower expense ratio but higher price volatility than Invesco S&P 500 Equal Weight Health Care ETF.

Invesco S&P 500 Equal Weight Health Care ETF holds fewer stocks but uses an equal-weighting strategy to diversify across the large-cap healthcare sector.

While Invesco Nasdaq Biotechnology ETF delivered a much higher 1-year return, it has also experienced a significantly deeper maximum drawdown over the last five years.

Investors weighing Invesco S&P 500 Equal Weight Health Care ETF (NYSEMKT:RSPH) against Invesco Nasdaq Biotechnology ETF (NASDAQ:IBBQ) must choose between a broad, equal-weighted healthcare mandate and a specialized, low-cost play on biotechnology firms.

Healthcare is rarely a monolithic sector. While some investors prefer broad exposure across insurance, equipment, and pharmaceuticals, others want to narrow their focus to the high-growth potential of biotechnology. The Invesco S&P 500 fund manages over $700 million more in assets, reflecting its longer history and broader large-cap mandate.

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Invesco biotechnology fund is the more affordable option with an expense ratio of 0.19%, while the Invesco S&P 500 fund charges 0.4%. Though both funds offer income, their yields are relatively modest compared to the broader market.

The Invesco S&P 500 fund tracks the S&P 500 Equal Weight Health Care Index, which gives every large-cap healthcare company in the benchmark an equal stake. Its largest positions include Charles River Laboratories International (NYSE:CRL) at 2.18%, Veeva Systems (NYSE:VEEV) at 2.13%, and Bio-Techne (NASDAQ:TECH) at 2.09%. This equal-weight structure means smaller firms have just as much influence as industry titans, leading to a portfolio of 60 holdings with a 98% healthcare and 2% technology tilt. The fund launched in 2006. Invesco S&P 500 Equal Weight Health Care ETF has paid $0.23 per share over the trailing 12 months, which on its recent ~$36.01 share price works out to a 0.6% yield.

In contrast, the Invesco biotechnology fund mirrors the Nasdaq Biotechnology Index, focusing exclusively on specialized biotech and pharmaceutical firms. Its largest positions include Amgen (NASDAQ:AMGN) at 8.71%, Vertex Pharmaceuticals (NASDAQ:VRTX) at 7.92%, and Gilead Sciences (NASDAQ:GILD) at 7.08%. While the fund is more concentrated in its top names, it holds 251 stocks in total, all within the healthcare sector. The recent 53.8% 1-year total return suggests significant momentum for these biotechnology companies compared to the broader healthcare sector. The fund launched in 2021. Invesco Nasdaq Biotechnology ETF has paid $0.26 per share over the trailing 12 months, which on its recent ~$34.10 share price works out to a 0.8% yield.

For more guidance on ETF investing, check out the full guide at this link.

Few sectors are generating as many investment opportunities right now as healthcare. Biopharma deal activity surged to its strongest quarter since 2020 earlier this year, GLP-1 drugs continue reshaping metabolic medicine, and FDA approvals are flowing at a steady pace. Both RSPH and IBBQ offer a way into that momentum.

RSPH holds 60 S&P 500 healthcare companies weighted equally, meaning a smaller specialty name like Bio-Techne carries the same portfolio influence as a pharmaceutical giant. That democratic approach reduces concentration but has not translated into strong recent returns, and the fund has been losing assets steadily over the past year.

IBBQ holds more than 250 Nasdaq-listed biotechnology companies at roughly half the cost of RSPH. That broader biotech universe includes earlier-stage companies with more room to grow and more risk of stumbling before they get there.

IBBQ's lower cost, broader diversification within biotechnology, and exposure to the full Nasdaq biotech landscape make it the more attractive buy for investors who want targeted biotech exposure today. RSPH appeals to those who want equal-weighted access to established S&P 500 healthcare names, though the numbers suggest investors are not convinced it is worth the premium.

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Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen, Gilead Sciences, Veeva Systems, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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