Should You Invest in the VanEck Vectors Pharmaceutical ETF (PPH)?
If you're interested in broad exposure to the Healthcare - Pharma segment of the U.S. equity market, look no further than the VanEck Vectors Pharmaceutical ETF (PPH), a passively managed exchange traded fund launched on 12/20/2011.
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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 $255.12 M, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Pharma segment of the U.S. 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it the least expensive product in the space.
It has a 12-month trailing dividend yield of 1.88%.
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, Glaxosmithkline Plc (GSK US) accounts for about 5.54% of total assets, followed by Astrazeneca Plc (AZN US) and Merck & Co Inc (MRK US).
The top 10 holdings account for about 51.20% of total assets under management.
Performance and Risk
The ETF has lost about -3.53% and is up about 8.33% so far this year and in the past one year (as of 04/24/2018), respectively. PPH has traded between $54.06 and $64.61 during this last 52-week period.
The ETF has a beta of 0.92 and standard deviation of 15.98% 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 Vectors 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 good 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 PowerShares Dynamic Pharmaceuticals Portfolio (PJP) tracks Dynamic Pharmaceutical Intellidex Index. IShares U.S. Pharmaceuticals ETF has $396.12 M in assets, PowerShares Dynamic Pharmaceuticals Portfolio has $563.27 M. IHE has an expense ratio of 0.44% and PJP charges 0.56%.
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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PWRSH-DYN PHARM (PJP): ETF Research Reports
VANECK-PHARMA (PPH): ETF Research Reports
ISHARS-US PHARM (IHE): ETF Research Reports
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