Looking for broad exposure to the Healthcare - Pharma segment of the equity market? You should consider the SPDR S&P Pharmaceuticals ETF (
XPH Quick Quote XPH - Free Report) , a passively managed exchange traded fund launched on 06/19/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 6, placing it in top 38%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $223.26 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 US common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Pharmaceuticals Index is a modified equal weight index.
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 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.51%.
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 100% of the portfolio.
Looking at individual holdings, Axsome Therapeutics Inc. (
AXSM Quick Quote AXSM - Free Report) accounts for about 4.73% of total assets, followed by Nektar Therapeutics ( NKTR Quick Quote NKTR - Free Report) and Corcept Therapeutics Incorporated. ( CORT Quick Quote CORT - Free Report) .
The top 10 holdings account for about 36.55% of total assets under management.
Performance and Risk
The ETF has lost about -9.73% so far this year and is down about -13.29% in the last one year (as of 09/06/2022). In that past 52-week period, it has traded between $38.15 and $52.45.
The ETF has a beta of 0.88 and standard deviation of 25.76% for the trailing three-year period, making it a high risk choice in the space. With about 44 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 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.
IShares U.S. Pharmaceuticals ETF (
IHE Quick Quote IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the VanEck Pharmaceutical ETF ( PPH Quick Quote PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index. IShares U.S. Pharmaceuticals ETF has $407.05 million in assets, VanEck Pharmaceutical ETF has $529.99 million. IHE has an expense ratio of 0.39% and PPH charges 0.35%. Bottom Line
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