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Is Invesco Dynamic Pharmaceuticals ETF (PJP) a Strong ETF Right Now?
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Designed to provide broad exposure to the Health Care ETFs category of the market, the Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) is a smart beta exchange traded fund launched on 06/23/2005.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Invesco, PJP has amassed assets over $326.09 million, making it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, PJP seeks to match the performance of the Dynamic Pharmaceutical Intellidex Index.
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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for PJP are 0.56%, which makes it on par with most peer products in the space.
PJP's 12-month trailing dividend yield is 0.95%.
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.
This ETF has heaviest allocation in the Healthcare sector - about 100% of the portfolio.
When you look at individual holdings, Pfizer Inc (PFE - Free Report) accounts for about 6.84% of the fund's total assets, followed by Merck & Co Inc (MRK - Free Report) and Abbvie Inc (ABBV - Free Report) .
PJP's top 10 holdings account for about 60.62% of its total assets under management.
Performance and Risk
The ETF has lost about -0.50% so far this year and is up roughly 2.70% in the last one year (as of 02/08/2023). In the past 52-week period, it has traded between $69.08 and $83.54.
The ETF has a beta of 0.67 and standard deviation of 22.29% 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 Dynamic Pharmaceuticals ETF 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.
IShares U.S. Pharmaceuticals ETF (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the VanEck Pharmaceutical ETF (PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index. IShares U.S. Pharmaceuticals ETF has $420.26 million in assets, VanEck Pharmaceutical ETF has $465.04 million. IHE has an expense ratio of 0.39% and PPH charges 0.35%.
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 Invesco Dynamic Pharmaceuticals ETF (PJP) a Strong ETF Right Now?
Designed to provide broad exposure to the Health Care ETFs category of the market, the Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) is a smart beta exchange traded fund launched on 06/23/2005.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Invesco, PJP has amassed assets over $326.09 million, making it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, PJP seeks to match the performance of the Dynamic Pharmaceutical Intellidex Index.
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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for PJP are 0.56%, which makes it on par with most peer products in the space.
PJP's 12-month trailing dividend yield is 0.95%.
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.
This ETF has heaviest allocation in the Healthcare sector - about 100% of the portfolio.
When you look at individual holdings, Pfizer Inc (PFE - Free Report) accounts for about 6.84% of the fund's total assets, followed by Merck & Co Inc (MRK - Free Report) and Abbvie Inc (ABBV - Free Report) .
PJP's top 10 holdings account for about 60.62% of its total assets under management.
Performance and Risk
The ETF has lost about -0.50% so far this year and is up roughly 2.70% in the last one year (as of 02/08/2023). In the past 52-week period, it has traded between $69.08 and $83.54.
The ETF has a beta of 0.67 and standard deviation of 22.29% 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 Dynamic Pharmaceuticals ETF 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.
IShares U.S. Pharmaceuticals ETF (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the VanEck Pharmaceutical ETF (PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index. IShares U.S. Pharmaceuticals ETF has $420.26 million in assets, VanEck Pharmaceutical ETF has $465.04 million. IHE has an expense ratio of 0.39% and PPH charges 0.35%.
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.