Investors have witnessed some incredible trading in the biotechnology ETF world as of late, as huge moves have been pretty much the norm in this corner of the market. In fact, the top biotech ETF, the iShares Nasdaq Biotechnology ETF (IBB), has oscillated between a 10% gain and a 10% loss in just the past three months alone.
Yet while many biotech ETFs have faltered, investors haven’t seen the same situation take place in the pharma ETF market. In this corner of the drug world, investments have seen weakness, but have held up much better than their more volatile biotech peers (see all the health care ETFs here).
Part of the reason for this is the focus of pharma ETFs on large caps as well as the significant allocations to companies that engage in various consumer product operations. These companies, like Johnson & Johnson (JNJ) or Merck (MRK) have big components in defensive industries and thus did not really participate in the bubble-like trading that many high flying biotechnology stocks experienced.
Pharma ETFs and More Information
Some ETFs that saw this type of trading include the PowerShares Dynamic Pharmaceutical ETF (PJP), the iShares US Pharmaceutical ETF (IHE), and the SPDR S&P Pharmaceutical ETF (XPH). All three have outperformed IBB by more than 1,000 basis points in the past three months and may be interesting picks for investors seeking some level of drug stock exposure, but with lower levels of risk (also see Inside the Wild Ride of Biotech ETFs).
For these investors, it might be a good idea to watch our short video below which highlights some of the trends in this market in greater detail, as well as the key differences between the aforementioned pharma ETFs:
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