10 Ways to Invest in Pharmaceuticals With ETFs #asia #pharma


Posted On Aug 25 2017 by

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10 Ways to Invest in Pharmaceuticals With ETFs

When it comes to health care, biotech is the sizzle, but pharmaceutical stocks are the steak. Big pharma stocks are financial tanks, sporting massive war chests that fund research and development, as well as acquisitions that bring in robust new drug pipelines. Pharma stocks typically don’t offer breakneck growth, but they provide a lot more stability than their growthier counterparts, and often dole out significant income to boot. If you’re looking to access a huge swath of the pharma space, you can do so via these exchange-traded funds.

SPDR S P Pharmaceuticals ETF (ticker: XPH )

SPDR S P Pharmaceuticals ETF (ticker: XPH )

The SPDR S P Pharmaceuticals ETF is one of the cheapest and most balanced ways to play the pharmaceutical space. It’s simple: XPH holds 40 companies that are engaged pharmaceutical treatments, and it does so in an “equal weight” format. Every quarter, XPH rebalances so it holds every stock at the same weight. This ensures that companies like $622 million Relypsa (RLYP ) has just as much of an effect on the fund as $311 billion titan Johnson Johnson (JNJ ).

Expenses: 0.35 percent, or $35 annually per $10,000 invested

VanEck Vectors Pharmaceuticals ETF (PPH )

VanEck Vectors Pharmaceuticals ETF (PPH )

The PPH, while not equal-weighted, still is a fairly balanced fund, though it’s not as broad as the XPH. PPH invests in 26 pharmaceutical-related companies – and “related” is the key term there, as we’re not just talking about drugmakers, but also companies that help distribute pharma treatments. That allows for the inclusion of companies like McKesson Corp. (MCK ), which delivers pharmaceuticals, as well as other health care-related products. Top holdings include Pfizer (PFE ) and Bristol-Myers Squibb Co. (BMY ).

Expenses: 0.36 percent (after a 5-basis-point fee waiver)

PowerShares Dynamic Pharmaceuticals Portfolio (PJP )

PowerShares Dynamic Pharmaceuticals Portfolio (PJP )

The PJP puts stocks through a screen that looks for quality, value and momentum criteria, among others. The end result is a group of just 23 stocks, and while top holdings do include traditional names like BMY and PFE, the fund is also heavy in biotechnology stocks such as Amgen (AMGN ) and Gilead Sciences (GILD ). PJP gives investors a bit more explosive upside than they would in funds like XPH and PPH; the downside is they’re more susceptible to the violent downturns in biotech.

Expenses: 0.56 percent

iShares U.S. Pharmaceuticals ETF (IHE )

iShares U.S. Pharmaceuticals ETF (IHE )

iShares’ IHE fund is a who’s who of American pharmaceutical companies, and at 42 holdings, it’s the broadest collection of pharma stocks on this list so far. The problem is, IHE is market cap-weighted. so America’s biggest pharma firms also exert the most influence. JNJ represents more than 10 percent of the fund, and top holdings PFE, BMY, Merck Co. (MRK ) and Eli Lilly and Co. (LLY ) combine to account for more than 40 percent of the ETF’s weight.

Expenses: 0.43 percent

VanEck Vectors Generic Drugs ETF (GNRX )

VanEck Vectors Generic Drugs ETF (GNRX )

Bloomberg research shows that over the next 10 years, more than $190 billion in brand-name drug money is expected to come off the table as 150-plus products go off-patent. That money will be siphoned off into generic drugmakers’ pockets. GNRX invests in 80 pharma companies that already derive (or “could” derive) a significant portion of revenues from generics, including top holdings Baxalta (BXLT ) and Teva Pharmaceuticals Industries (TEVA ). The ETF is a new one, having started in January.

Expenses: 0.55 percent (after a 10-basis point waiver)

Health Care Select Sector SPDR Fund (XLV )

Health Care Select Sector SPDR Fund (XLV )

The XLV is perhaps the most well-known name in health care funds. State Street Global Advisers’ fund has been around since 1998 and has amassed a whopping $12.2 billion in assets under management. No wonder – even with the pullback of the past few months, XLV has doubled investors’ money over the past five years, beating the Standard Poor’s 500 index by more than 40 percentage points. Not bad for a diversified blue-chip fund.

Expenses: 0.14 percent

SPDR S P International Health Care Sector ETF (IRY )

SPDR S P International Health Care Sector ETF (IRY )

IRY offers investors a health care investment with an international bent. This ETF is similar to XLV in that it includes a number of different health care industries, but IRY is a much purer way to play the pharmaceutical space, as more than 70 percent of the fund leans toward that part of the sector. While 21 countries are represented, the bulk of the fund is invested in Switzerland, Japan and the United Kingdom – and that shows in top holdings such as Novartis (NVS ) and GlaxoSmithKline (GSK ).

Expenses: 0.4 percent

Direxion Daily Pharmaceutical Medical Bull and Bear 2x Shares (PILL. PILS )

Direxion Daily Pharmaceutical Medical Bull and Bear 2x Shares (PILL. PILS )

If you’re looking to make an exaggerated short-term bet on pharmaceuticals – either on the bull side or the bear side – you can do so with Direxion’s respective funds. PILL and PILS are designed to provide 200 percent and -200 percent, respectively, of the daily return of the Dynamic Pharmaceutical Intellidex index – the same index followed by the PJP. As is the case with any leveraged fund, note that PILL and PILS are not meant to be held for long and instead should be used for quick swing trades.

Expenses: 0.8 percent

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Last Updated on: August 25th, 2017 at 4:59 pm, by


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