Investors are evaluating the Fidelity MSCI Health Care Index ETF (FHLC) and the iShares U.S. Healthcare ETF (IYH) for 2026 portfolios [1, 2].
The choice between these funds is critical as investors seek to balance risk and return within the U.S. healthcare sector during a period of market divergence.
Market data shows that FHLC has struggled recently. The fund is down about five percent year-to-date [4]. This performance lags behind the broader market, as the S&P 500 is up seven percent year-to-date [4].
Long-term trends also reveal a gap between healthcare-specific funds and the general market. FHLC has returned 15% over the past five years [4]. During that same five-year period, the S&P 500 has returned about 80% [4].
Analysts are comparing the two funds based on portfolio size, stock selection, and risk profiles to determine which provides a better entry point for 2026 [1, 2]. The evaluation focuses on how these ETFs manage healthcare assets relative to the overall volatility of U.S. equity markets [3].
While the Fidelity fund has shown consistent growth over five years, the disparity between its 15% return and the S&P 500's 80% return highlights the challenges facing the healthcare sector [4]. Investors must now decide if the current dip in FHLC represents a buying opportunity or a continuing trend of underperformance compared to the iShares alternative [1, 2].
“FHLC is down about five percent year-to-date”
The significant performance gap between the healthcare sector and the S&P 500 suggests that healthcare ETFs are currently acting as a drag on diversified portfolios. Investors choosing between FHLC and IYH are essentially deciding whether to bet on a sector recovery or prioritize funds with different stock selection weights to mitigate further losses.
