Designed to provide broad exposure to the Healthcare - Pharma segment of the equity market, the Invesco Pharmaceuticals ETF (
PJP Quick Quote PJP - Free Report) is a passively managed exchange traded fund launched on 06/23/2005.
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.
Additionally, sector ETFs offer convenient 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 2, placing it in top 13%.
The fund is sponsored by Invesco. It has amassed assets over $247.98 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. PJP seeks to match the performance of the Dynamic Pharmaceutical Intellidex Index before fees and expenses.
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.
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 0.57%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.07%.
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, Amgen Inc (
AMGN Quick Quote AMGN - Free Report) accounts for about 6.45% of total assets, followed by Eli Lilly & Co ( LLY Quick Quote LLY - Free Report) and Abbvie Inc ( ABBV Quick Quote ABBV - Free Report) .
The top 10 holdings account for about 55.25% of total assets under management.
Performance and Risk
Year-to-date, the Invesco Pharmaceuticals ETF has lost about -10.25% so far, and is down about -10.03% over the last 12 months (as of 11/28/2023). PJP has traded between $67.88 and $81.07 in this past 52-week period.
The ETF has a beta of 0.63 and standard deviation of 15.96% for the trailing three-year period, making it a high risk choice in the space. With about 25 holdings, it has more concentrated exposure than peers.
Invesco 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, PJP 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.
VanEck Pharmaceutical ETF (
PPH Quick Quote PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index and the iShares U.S. Pharmaceuticals ETF ( IHE Quick Quote IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index. VanEck Pharmaceutical ETF has $383.77 million in assets, iShares U.S. Pharmaceuticals ETF has $567.76 million. PPH has an expense ratio of 0.36% and IHE charges 0.40%. Bottom Line
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