Use Pharmaceutical ETFs to Invest in the Pharma Sector
Updated August 06, 2016
The pharmaceutical industry is quite a large and powerful sector. New advancements in medicine are leading to new drugs being tested and created every day. And then, unfortunately, there are medications that have recalls, side effects or fail to produce as advertise.
As an investor, this size and volatility can lead to many opinions and opportunities. Trading opportunities. So if you feel this is an untapped market for your portfolio, then you’re going to want exposure to this industry.
Now, you can consider buying individual pharma company stocks, perhaps an index, or even a mutual fund targeting the sector. But I am going to suggest you research some pharmaceutical ETFs instead.
ETFs come with many advantages over mutual funds (lower fees ), indexes (easier transactions) and individual stocks (sector diversification), and they also have tax benefits as well. So if you want instant exposure to the pharma sector with one simple transaction, a pharmaceutical ETF may be the way to go.
And to help you with your decision, I’ve compiled a list of pharma ETFs to help you with your research. Take the time to research each fund and see which (if any) is the best fit for your portfolio or investing strategy.
DRGS – RBS Global Big Pharma ETN
This is actually a pharmaceutical ETN and is linked to the NYSE Arca Equal Weighted Pharmaceutical Total Return Index. The exchange traded note targets companies involved in various phases of development, production and marketing of pharmaceuticals.
The holdings are represented in approximately equal dollar amounts.
The underlying index is rebalanced quarterly at the close of trading on the third Friday of March, June, September and December. Some of the top holdings include Shire (SHPGY), Allergen (AGN), and Merck (MRK).
IHE – iShares Dow Jones US Pharmaceuticals ETF
This pharma ETF tracks the Dow Jones U.S. Select Pharmaceuticals Index and some of the top holdings are Pfizer, Johnson and Johnson, Merk, and Abbott Labs.
This pharmaceutical ETF follows the Dynamic Pharmaceuticals Intellidex Index. Some of the top holdings in this fund are Amgen, Gilead Sciences, Pfizer and Merck.
XPH – SPDR S P Pharmaceuticals ETF
This SPDR correlates with the S P Pharmaceuticals Select Industry Index (SPSIPHTR). The top holdings in this exchange traded fund are Jazz Pharmaceuticals, Hospira Inc, ViroPharma and Merck. Be sure to check back to this list often as I will update it as it grows as well as remove any ETFs that get de-listed.
- PILL – Direxion Daily Pharmaceutical Medical Bull 2X Shares ETF
- PILS – Direxion Daily Pharmaceutical Medical Bear 2X Shares ETF
And before making any trades, make sure to consult your financial advisor, your broker or a financial professional. Research each pharma ETF individually and have a good feel for how the funds work and how they react to different market conditions.
As with any investment (ETF or otherwise), conduct the due diligence necessary to make the right decisions based on your risks and your goals. No investment is risk-free, so make sure you are aware of the pros and cons of any trade or in this case…pharmaceutical ETF.
And if you’re looking for some related ETFs, then here are two more lists for you. I’ve compiled a list of healthcare ETFs and then after that is a list of biotechnology funds.
List of Health Care ETFs
- AXHE – iShares MSCI ACWI ex US Health Care Sector Index ETF
- CURE – Direxion Daily Health Care Bull 3X Shares ETF
- FHC – Focus Morning Star Health Care Index ETF
- FXH – First Trust Health Care Alpha DEX ETF
- HGEM – EG Shares Health Care GEMS ETF
- IHF – iShares Dow Jones US Health Care Provider ETF
- IRY – SPDR S P International Health Care Sector ETF
- IXJ – iShares S P Global Health Care Sector ETF
- IYH – iShares Dow Jones US Health Care ETF
- PTH – Power Shares Dynamic Health Care ETF
- RXD – Ultra Short Health Care Pro Shares ETF
- RXL – Ultra Health Care Pro Shares ETF
- RYH – Rydex S P Equal Weight Health Care ETF
- SICK – Direxion Daily Health Care Bear 3X Shares ETF
- VHT – Vanguard Health Care ETF
- XHE – SPDR S P Health Care Equipment ETF
- XHS – SPDR S P Health Care Services ETF
List of BioTechnology ETFs
- BBH – Market Vectors Biotech ETF
- BIB – Ultra NASDAQ Biotechnology ETF
- BIS – Ultra Short NASDAQ Biotechnology ETF
- FBT – First Trust NYSE Arca Biotech Index ETF
- IBB – iShares Nasdaq Biotechnology ETF
- PBE – Power Shares Dynamic Biotech Genome ETF
- XBI – SPDR S P Biotech ETF