Like most other sectors, the pharmaceutical sector is no stranger to exchange-traded funds (ETFs).
The role of an ETF is to provide investors with an investment option that isn’t tied to one sole company. Instead, an ETF will hold a basket of assets – stocks, bonds, commodities – that trades close to its net asset value over the course of the day.
Furthermore, ETFs tend to track an index, making them a prime example for how a sector is performing on any given day.
To help make investors aware of some of their options when looking at investing in the pharmaceutical sector, the Investing News Network (INN) looks at the five top ETFs (barring any leveraged ETFs) in the space. Included on the list are:
- PowerShares Dynamic Pharmaceuticals Portfolio ETF (NYSEARCA:PJP)
- iShares US Pharmaceuticals ETF (NYSEARCA:IHE)
- SPDR S&P Pharmaceuticals ETF (NYSEARCA:XPH)
- Market Vectors Pharmaceuticals ETF (NYSEARCA:PPH)
- Market Vectors Generic Drugs ETF (NASDAQ:GNRX)
The funds are arranged by the value of their assets.
PowerShares Dynamic Pharmaceuticals Portfolio ETF
Launched in 2005, the PowerShares Dynamic Pharmaceuticals Portfolio ETF is based on the Dynamic Pharmaceutical Intellidex Index (INDEXNYSEGIS:DZR). PJP has 30 holdings on American pharmaceutical companies, and on the whole, will invest about 90 percent of its total assets in common stocks that make up the index.
The fund holds a majority mix of large-cap stocks, with a smaller addition of small cap – particularly growth oriented– stocks. Among its listings, investors will find Amgen (NASDAQ:AMGN), Eli Lilly (NYSE:LLY), The Medicines Company (NASDAQ:MDCO) and Allergan Pharmaceuticals (NYSE:AGN).
iShares US Pharmaceuticals ETF
Tracking the Dow Jones US Select Pharmaceuticals Index (INDEXDJX:DJSPHM), the iShares US Pharmaceutical ETF has been around since 2006. The fund holds 40 assets, aimed at providing investors with exposure to US companies that manufacture prescription or over the counter drugs or vaccines. This ETFs holds net assets worth $594,395,987.
SPDR S&P Pharmaceuticals ETF
XPH is a passive fund that is managed with a small gross expense ratio of 0.35 percent. The fund tracks the S&P Pharmaceuticals Select Industry Index (INDEXNYSEGIS:SPSIPH) and is distributed by State Street Global Advisors. With only 38 holdings, the fund has a weighted average market cap of $52,112.54 million.
Market Vectors Pharmaceuticals ETF
Sponsored by VanEck, the Market Vectors Pharmaceutical ETF tracks the performance of the Market Vectors US Listed Pharmaceutical 25 Index and has been around since 2011. The fund has a gross expense ratio of 0.41 percent, while only accounting for 25 holdings. PPH’s net asset value is around $55.22 million.
Market Vectors Generic Drugs ETF
Finally, the Market Vectors Generic Drugs ETF came into existence in early 2016 and is the only ETF to offer global exposure to generic drug producers. Like its peers, GNRX tracks an index, and in this case, the fund is looking to track the performance of the Indxx Global Generics & New Pharma Index.
The fund has a total net asset value of $4.5 million and a portfolio of 41 holdings. The top three holdings in GNRX are Quintiles IMS Holdings (NYSE:Q), Lonza Group (VTX:LONN) and Sun Pharmaceutical Industries (NSE:SUNPHARMA).
This is an updated version of an article originally published on the Investing News Network in 2016.
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Securities Disclosure: I, Bryan Mc Govern, hold no investment interest in any of the companies mentioned.