Should You Invest in the Fidelity MSCI Health Care Index ETF (FHLC)?

Looking for broad exposure to the Healthcare - Broad segment of the equity market? You should consider the Fidelity MSCI Health Care Index ETF (FHLC), a passively managed exchange traded fund launched on 10/21/2013.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by Fidelity. It has amassed assets over $2.56 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. FHLC seeks to match the performance of the MSCI USA IMI Health Care Index before fees and expenses.

The MSCI USA IMI Health Care 25/50 Index represents the performance of the health care sector in the U.S. equity market.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.08%, making it the least expensive product in the space.

It has a 12-month trailing dividend yield of 1.54%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Eli Lilly + Co Common Stock (LLY) accounts for about 10.96% of total assets, followed by Unitedhealth Group Inc Common Stock Usd.01 (UNH) and Johnson + Johnson Common Stock Usd1.0 (JNJ).

The top 10 holdings account for about 50.28% of total assets under management.

Performance and Risk

The ETF has lost about -0.07% and was up about 0.28% so far this year and in the past one year (as of 04/29/2025), respectively. FHLC has traded between $61.94 and $74.23 during this last 52-week period.

The ETF has a beta of 0.73 and standard deviation of 14.80% for the trailing three-year period, making it a medium risk choice in the space. With about 350 holdings, it effectively diversifies company-specific risk.

Alternatives

Fidelity MSCI Health Care Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FHLC is a good option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $15.73 billion in assets, Health Care Select Sector SPDR ETF has $35.81 billion. VHT has an expense ratio of 0.09% and XLV charges 0.08%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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