Which Healthcare ETF Is the Better Buy: Invesco’s Broad RSPH or First Trust’s Biotech FBT?

For the trailing year through Oct. 26, 2026, FBT returned 43.3% versus RSPH’s 28.6%, but had a larger five-year maximum drawdown of 27.4% versus 21.9%. RSPH offers broader exposure across 61 healthcare positions and a lower 0.40% expense ratio, compared with FBT’s 30-stock biotech focus and 0.55% fee. The article presents RSPH as the more dependable option for diversified healthcare exposure and FBT for investors willing to accept greater concentration and volatility.

Analysis

The key portfolio distinction is factor exposure, not simply healthcare breadth: equal weighting limits single-name dominance but does not diversify away correlated biotech funding, clinical-readout, and deal-cycle risk. FBT’s recent lead may therefore be unusually sensitive to a handful of binary events and acquisition expectations. A reversal in deal activity or disappointing readouts could hit the 30-stock basket together, even if broad healthcare remains resilient. Conversely, sustained positive trial results and strategic bids could extend the relative move; selling biotech solely because it has outperformed is not a sufficient catalyst.

The overlap in named holdings, particularly Illumina, also means an FBT/RSPH pair is not a pure biotech-versus-healthcare hedge. RSPH may still carry biotech-linked exposure through constituents such as Moderna, while FBT includes companies with diagnostics, tools, or platform economics rather than only drug developers. Verify current constituents, weights, fund flows, valuation dispersion, and earnings-revision breadth before sizing. Near term, relative performance and event headlines dominate; over 1–3 months, trial outcomes, FDA decisions, and M&A completion or termination are key. Over 6–18 months, financing conditions and the ability of biotech firms to translate pipelines into durable cash flows matter more than ETF momentum.

Key Decisions for Investors

• Avoid treating the trailing return gap as proof that biotech leadership will persist. For a diversified healthcare allocation, prefer RSPH unless the portfolio explicitly seeks concentrated biotech event risk.
• Conditional relative-value idea: consider a modest, dollar-neutral long RSPH / short FBT only if FBT’s relative strength rolls over and biotech earnings revisions or deal activity weaken. Shared holdings and factor overlap limit hedge effectiveness; size accordingly.
• Falsify the relative-value thesis if biotech breadth, forward earnings revisions, and completed strategic deals strengthen together and FBT continues to outperform. Reassess on major FDA/readout outcomes and any material shift in funding conditions.
• Before trading, verify current holdings and weights, valuation and flow data, and the timing of portfolio rebalance effects; the supplied snapshot alone does not establish fair value or a durable catalyst.