Designed to provide broad exposure to the Healthcare - Pharma segment of the equity market, the Invesco Pharmaceuticals ETF (PJP) is a passively managed exchange traded fund launched on 06/23/2005.
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.
Investor-friendly, sector ETFs provide many options 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 4, placing it in top 25%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $282.27 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. PJP seeks to match the performance of the Dynamic Pharmaceutical Intellidex Index before fees and expenses.
The Dynamic Pharmaceutical Intellidex Index is comprised of stocks of U.S. pharmaceutical companies. It is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.90%.
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.
This ETF has heaviest allocation in the Healthcare sector--about 99.90% of the portfolio.
Looking at individual holdings, Abbvie Inc (ABBV) accounts for about 6.23% of total assets, followed by Amgen Inc (AMGN) and Regeneron Pharmaceuticals Inc (REGN).
The top 10 holdings account for about 56.76% of total assets under management.
Performance and Risk
The ETF has gained about 12.84% so far this year and is up roughly 11.40% in the last one year (as of 08/05/2024). In that past 52-week period, it has traded between $67.88 and $86.53.
The ETF has a beta of 0.58 and standard deviation of 15.47% for the trailing three-year period, making it a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Pharmaceuticals 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, PJP is a sufficient 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.
VanEck Pharmaceutical ETF (PPH) tracks MVIS US Listed Pharmaceutical 25 Index and the iShares U.S. Pharmaceuticals ETF (IHE) tracks Dow Jones U.S. Select Pharmaceuticals Index. VanEck Pharmaceutical ETF has $633.22 million in assets, iShares U.S. Pharmaceuticals ETF has $667.58 million. PPH has an expense ratio of 0.36% and IHE charges 0.40%.
Bottom Line
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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Get it free >>Invesco Pharmaceuticals ETF (PJP): ETF Research Reports
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
VanEck Pharmaceutical ETF (PPH): 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.
