The SPDR S&P Pharmaceuticals ETF (
XPH Quick Quote XPH - Free Report) was launched on 06/19/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Healthcare - Pharma segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many 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 16, placing it in bottom 0%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $270.32 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. XPH seeks to match the performance of the S&P Pharmaceuticals Select Industry Index before fees and expenses.
The S&P Pharmaceuticals Select Industry Index represents the pharmaceuticals sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Pharmaceuticals Index is a modified equal weight index.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.50%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.
Looking at individual holdings, Cassava Sciences Inc. (
SAVA Quick Quote SAVA - Free Report) accounts for about 5.33% of total assets, followed by Zoetis Inc. Class A ( ZTS Quick Quote ZTS - Free Report) and Eli Lilly And Company ( LLY Quick Quote LLY - Free Report) .
The top 10 holdings account for about 46.74% of total assets under management.
Performance and Risk
So far this year, XPH has added roughly 0.87%, and it's up approximately 20.58% in the last one year (as of 07/13/2021). During this past 52-week period, the fund has traded between $42.46 and $56.01.
The ETF has a beta of 1.09 and standard deviation of 25.04% for the trailing three-year period, making it a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
SPDR S&P 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, XPH is a good 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 Quick Quote PJP - Free Report) tracks Dynamic Pharmaceutical Intellidex Index and the iShares U.S. Pharmaceuticals ETF ( IHE Quick Quote IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index. Invesco Dynamic Pharmaceuticals ETF has $367.20 million in assets, iShares U.S. Pharmaceuticals ETF has $386.97 million. PJP has an expense ratio of 0.56% and IHE charges 0.42%. Bottom Line
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