The health care sector has been on fire in 2014, as investors
continue to bet on the development of new drugs and increased
need for medical services.
On Tuesday, the pharmaceuticals industry received a vote of
confidence, after both Pfizer Inc (NYSE:
) and Merck & Co. (NYSE:
) reported better than expected earnings. Both stocks moved
higher on this positive news and in turn provided a tailwind for
several ETFs that have core exposure to this group.
The Market Vectors Pharmaceutical ETF (NYSE:
) provides exposure to 25 of the largest and most liquid
U.S.-listed pharmaceutical companies. Both PFE and MRK are in the
top holdings of this fund, which charges an expense ratio of 0.35
percent. PPH currently has more than $320 million in total assets
and a 30-day SEC yield of 1.87 percent.
A Resources ETF With An Upstream Emphasis
So far this year, PPH has gained 17.28 percent versus a gain
of 12.84 percent in the benchmark Health Care Select Sector SPDR
). This strong momentum makes PPH the best performing health care
ETF, to-date, in 2014.
PPH has benefitted from its exposure to the largest companies
in this group, along with 40 percent of the portfolio dedicated
to European equities trading on U.S. exchanges.
Another well-known ETF in this space that takes a more
fundamental approach is the PowerShares Dynamic Pharmaceuticals
). This ETF is based on an index that selects companies by
monitoring a variety of investment merit criteria, including
price momentum, earnings momentum, quality, management action and
PJP includes exposure to both large- and small-cap holdings,
which allows it to capture a wider swath of the health care
universe. This fund currently has more than $1.1 billion in total
assets and charges an expense ratio of 0.63 percent.
So far this year, PJP has gained 12.89 percent, as recent
volatility in the biotech sector has led to a modest pullback.
However, additional positive earnings announcements combined with
a strong fundamental backdrop for the health care sector may lead
to further growth this year.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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