Should You Invest in the VanEck Vectors Pharmaceutical ETF (PPH)?
Designed to provide broad exposure to the Healthcare - Pharma segment of the equity market, the VanEck Vectors Pharmaceutical ETF (PPH) is a passively managed exchange traded fund launched on 12/20/2011.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Pharma is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
The fund is sponsored by Van Eck. It has amassed assets over $235.69 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. PPH seeks to match the performance of the MVIS US Listed Pharmaceutical 25 Index before fees and expenses.
The MVIS US Listed Pharmaceutical 25 Index tracks the overall performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well a production, marketing and sales of pharmaceuticals.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.36%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.61%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Novo Nordisk A/s (NVO) accounts for about 5.23% of total assets, followed by Astrazeneca Plc (AZN) and Bristol-Myers Squibb Co (BMY).
The top 10 holdings account for about 50.02% of total assets under management.
Performance and Risk
The ETF has lost about -0.50% so far this year and is up about 14.32% in the last one year (as of 10/15/2020). In that past 52-week period, it has traded between $47.54 and $67.62.
The ETF has a beta of 0.86 and standard deviation of 21.12% for the trailing three-year period, making it a medium risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.
VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PPH is a reasonable option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Invesco Dynamic Pharmaceuticals ETF (PJP) tracks Dynamic Pharmaceutical Intellidex Index and the iShares U.S. Pharmaceuticals ETF (IHE) tracks Dow Jones U.S. Select Pharmaceuticals Index. Invesco Dynamic Pharmaceuticals ETF has $333.25 million in assets, iShares U.S. Pharmaceuticals ETF has $363.67 million. PJP has an expense ratio of 0.56% and IHE charges 0.42%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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VanEck Vectors Pharmaceutical ETF (PPH): ETF Research Reports
Novo Nordisk AS (NVO): Free Stock Analysis Report
AstraZeneca PLC (AZN): Free Stock Analysis Report
Bristol Myers Squibb Company (BMY): Free Stock Analysis Report
Invesco Dynamic Pharmaceuticals ETF (PJP): ETF Research Reports
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.