Stop Focusing Only on Lilly — This ETF Gives You All Healthcare Leaders for Just 0.09% Expense Ratio

💬 Investment Talk: Are you betting big on LLY, or diversifying with a low-cost healthcare ETF? Share your strategy!

So far this year, the healthcare sector has pulled back in line with the broader U.S. stock market. As the largest U.S. healthcare company by market cap, $Eli Lilly(LLY)$has dropped 15.6% year-to-date, becoming a major drag on sector performance.

While investor attention remains fixed on Lilly, the risks behind it are impossible to ignore: the company’s growth is heavily concentrated in the weight-loss drug category.

For most investors, rather than betting on a single stock, allocating to the entire healthcare sector through a low-cost industry ETF is likely a more prudent approach.

Lilly’s Success — and Risk — Come From Over-Concentration

Lilly’s pipeline covers Alzheimer’s, autoimmune diseases, diabetes, obesity, and more. But the true engine of its earnings and stock price is its GLP-1 drugs:

Mounjaro (Type 2 diabetes) and Zepbound (weight management).

In 2025, these two drugs alone accounted for 56% of Lilly’s total revenue — up sharply from 36.7% in 2024.

This intense focus means vulnerability to pricing pressure, competitive threats, and FDA regulatory changes has risen dramatically.

On valuation:

• Lilly’s current trailing P/E: 40.1x

• Forward P/E (assuming high growth): 26.1x

This premium is fully priced on Lilly maintaining dominance in weight-loss drugs.

If demand stays strong, Lilly may still look cheap long-term. But if growth slows or superior competitors emerge, earnings and the stock could face heavy pressure.

Instead of Betting on One Leader — Own Them All With an ETF

For investors who want to avoid single-stock concentration risk, Vanguard Healthcare ETF (VHT) offers a far more balanced solution.

This ETF holds over 400 stocks, spanning biotech, pharmaceuticals, medical devices, healthcare services, and more.

Notably, Lilly is VHT’s top holding at 12.6%.

This structure lets investors:

• Capture Lilly’s growth from the weight-loss boom

• Avoid the extreme risk of being overexposed to one company

On valuation and costs:

• VHT current P/E: 25.3x

• Dividend yield: 1.6%

• Expense ratio: only 0.09% — far below the average for actively managed funds

Compared with the S&P 500 ETF (25.8x P/E, 1.1% yield), VHT offers slight advantages in both valuation and income.

Final Takeaway

Lilly remains a pharmaceutical leader with strong competitive advantages and still appeals to growth investors willing to accept high concentration risk.

But for those who want to:

• Participate in the broader weight-loss drug megatrend

• Reduce single-stock volatility

• Diversify across the entire healthcare sector

Low-cost sector ETFs like VHT are simply a better, more balanced choice for most market participants.

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