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Exchange-traded funds that hold big pharma

Mike Benson

What it means to be 'big pharma' in a $980 billion industry (Part 10 of 10)

(Continued from Part 9)

The benefits of ETFs

Exchange-traded funds, or ETFs, are securities that are publicly traded on stock markets. ETFs track an index, a commodity, or a basket of assets. They’re designed for investors that don’t have the capacity to hold many stocks, but that are interested in diversified investment within a particular sector or industry.

Aside from diversification, the key benefits of ETFs are that an investor can sell short, buy on margin, and purchase as little as one share. Also, the expense ratios for ETFs are much lower than for mutual funds.

The above chart compares ETFs and returns over five years. The rest of this article discusses major ETFs in the big pharma sector and their holdings.

The Market Vectors Pharmaceutical ETF (PPH)

This fund has been operational since 2011 and has net assets of $345.54 million. Big pharma companies like Johnson & Johnson (JNJ), Novartis AG (NVS), and Pfizer together form 24.61% of this fund’s total assets.

The Health Care Select Sector SPDR Fund (XLV)

This fund has been operational since 1998 and has net assets of $13 billion. This ETF is focused on big pharma companies, healthcare equipment and supplies, and biotechnology companies. Big pharma companies including Johnson & Johnson and Pfizer (PFE) together form 17.94% of this fund’s total assets.

The PowerShares Dynamic Pharmaceuticals ETF (PJP)

This fund has been operational since 2005 and has net assets of $1.62 billion. Big pharma companies including Eli Lilly and Company, Bristol-Myers Squibb Company (BMY), and Pfizer together form 14.78% of this fund.

The SPDR S&P Pharmaceuticals ETF (XPH)

This fund tracks an index that represents the pharmaceutical sub-industry portion of the S&P Total Markets Index. XPH has been operational since 2006 and has net assets of $1.11 billion. Salix Pharmaceuticals forms 3.91% of this fund.

The iShares U.S. Pharmaceuticals ETF (IHE)

This fund has been operational since 2006 and its net assets are $888.97 million. Johnson & Johnson forms 8.23% of this fund.

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