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The SPDRSP PHARMA (XPH - Free Report) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by State Street Global Advisors, XPH has amassed assets over $253.60 million, making it one of the average sized ETFs in the Health Care ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P Pharmaceuticals Select Industry Index.
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.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.59%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For XPH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Looking at individual holdings, Merck & Co. Inc. (MRK - Free Report) accounts for about 5.24% of total assets, followed by Organon & Co. (OGN - Free Report) and Perrigo Co. Plc (PRGO - Free Report) .
The top 10 holdings account for about 45.84% of total assets under management.
Performance and Risk
So far this year, XPH has lost about -1.40%, and is up about 6.53% in the last one year (as of 11/15/2021). During this past 52-week period, the fund has traded between $46.51 and $56.01.
The ETF has a beta of 1 and standard deviation of 25.15% for the trailing three-year period, making it a high risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.
Alternatives
SPDRSP PHARMA is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
ISHARSUS PHARM (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the INVSDYN PHARM (PJP - Free Report) tracks Dynamic Pharmaceutical Intellidex Index. ISHARSUS PHARM has $391 million in assets, INVSDYN PHARM has $444.44 million. IHE has an expense ratio of 0.42% and PJP charges 0.58%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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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Is SPDRSP PHARMA (XPH) a Strong ETF Right Now?
The SPDRSP PHARMA (XPH - Free Report) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by State Street Global Advisors, XPH has amassed assets over $253.60 million, making it one of the average sized ETFs in the Health Care ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P Pharmaceuticals Select Industry Index.
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.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.59%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For XPH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Looking at individual holdings, Merck & Co. Inc. (MRK - Free Report) accounts for about 5.24% of total assets, followed by Organon & Co. (OGN - Free Report) and Perrigo Co. Plc (PRGO - Free Report) .
The top 10 holdings account for about 45.84% of total assets under management.
Performance and Risk
So far this year, XPH has lost about -1.40%, and is up about 6.53% in the last one year (as of 11/15/2021). During this past 52-week period, the fund has traded between $46.51 and $56.01.
The ETF has a beta of 1 and standard deviation of 25.15% for the trailing three-year period, making it a high risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.
Alternatives
SPDRSP PHARMA is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
ISHARSUS PHARM (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the INVSDYN PHARM (PJP - Free Report) tracks Dynamic Pharmaceutical Intellidex Index. ISHARSUS PHARM has $391 million in assets, INVSDYN PHARM has $444.44 million. IHE has an expense ratio of 0.42% and PJP charges 0.58%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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.