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Should You Invest in the VanEck Pharmaceutical ETF (PPH)?

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·3 min read
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Launched on 12/20/2011, the VanEck Pharmaceutical ETF (PPH) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Pharma segment of the equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many 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 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $316.32 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. PPH seeks to match the performance of the MVIS US Listed Pharmaceutical 25 Index before fees and expenses.

The MVIS US Listed Pharmaceutical 25 Index tracks the overall performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well a production, marketing and sales of pharmaceuticals.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.73%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Novo Nordisk A/s (NVO) accounts for about 5.64% of total assets, followed by Astrazeneca Plc (AZN) and Merck & Co Inc (MRK).

The top 10 holdings account for about 51.23% of total assets under management.

Performance and Risk

Year-to-date, the VanEck Pharmaceutical ETF has added about 9.99% so far, and it's up approximately 10.31% over the last 12 months (as of 12/07/2021). PPH has traded between $65.29 and $77.22 in this past 52-week period.

The ETF has a beta of 0.86 and standard deviation of 20.45% for the trailing three-year period, making it a medium risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.

Alternatives

VanEck Pharmaceutical 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, PPH is a reasonable 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.

IShares U.S. Pharmaceuticals ETF (IHE) tracks Dow Jones U.S. Select Pharmaceuticals Index and the Invesco Dynamic Pharmaceuticals ETF (PJP) tracks Dynamic Pharmaceutical Intellidex Index. IShares U.S. Pharmaceuticals ETF has $371.32 million in assets, Invesco Dynamic Pharmaceuticals ETF has $419.76 million. IHE has an expense ratio of 0.42% and PJP charges 0.58%.

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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VanEck Pharmaceutical ETF (PPH): ETF Research Reports
 
AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Novo Nordisk AS (NVO) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Invesco Dynamic Pharmaceuticals ETF (PJP): ETF Research Reports
 
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
 
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