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Is SPDR S&P Pharmaceuticals ETF (XPH) a Strong ETF Right Now?
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Launched on 06/19/2006, the SPDR S&P Pharmaceuticals ETF (XPH - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $209.46 million, this makes it one of the average sized ETFs in the Health Care ETFs. XPH is managed by State Street Global Advisors. Before fees and expenses, this particular fund 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 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.
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 XPH are 0.35%, which makes it one of the least expensive products in the space.
XPH's 12-month trailing dividend yield is 1.64%.
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.
Taking into account individual holdings, Harmony Biosciences Holdings Inc. (HRMY - Free Report) accounts for about 4.45% of the fund's total assets, followed by Merck & Co. Inc. (MRK - Free Report) and Axsome Therapeutics Inc. (AXSM - Free Report) .
Its top 10 holdings account for approximately 39.57% of XPH's total assets under management.
Performance and Risk
So far this year, XPH has added about 0.29%, and is down about -1.06% in the last one year (as of 03/15/2023). During this past 52-week period, the fund has traded between $38.15 and $46.44.
XPH has a beta of 0.84 and standard deviation of 24.47% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 46 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Pharmaceuticals ETF is not a suitable option for investors seeking to outperform the Health Care ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $369.38 million in assets, VanEck Pharmaceutical ETF has $382.67 million. IHE has an expense ratio of 0.39% and PPH charges 0.36%.
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 SPDR S&P Pharmaceuticals ETF (XPH) a Strong ETF Right Now?
Launched on 06/19/2006, the SPDR S&P Pharmaceuticals ETF (XPH - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $209.46 million, this makes it one of the average sized ETFs in the Health Care ETFs. XPH is managed by State Street Global Advisors. Before fees and expenses, this particular fund 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 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.
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 XPH are 0.35%, which makes it one of the least expensive products in the space.
XPH's 12-month trailing dividend yield is 1.64%.
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.
Taking into account individual holdings, Harmony Biosciences Holdings Inc. (HRMY - Free Report) accounts for about 4.45% of the fund's total assets, followed by Merck & Co. Inc. (MRK - Free Report) and Axsome Therapeutics Inc. (AXSM - Free Report) .
Its top 10 holdings account for approximately 39.57% of XPH's total assets under management.
Performance and Risk
So far this year, XPH has added about 0.29%, and is down about -1.06% in the last one year (as of 03/15/2023). During this past 52-week period, the fund has traded between $38.15 and $46.44.
XPH has a beta of 0.84 and standard deviation of 24.47% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 46 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Pharmaceuticals ETF is not a suitable option for investors seeking to outperform the Health Care ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $369.38 million in assets, VanEck Pharmaceutical ETF has $382.67 million. IHE has an expense ratio of 0.39% and PPH charges 0.36%.
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.