What are ETFs?
ETFs are the investment funds—like index funds and mutual funds—that track an index, a commodity, or a basket of assets. Unlike these funds, ETFs are publicly traded on an exchange—like a stock. The net asset value of underlying assets would be an ETF’s trading price.
These funds are gaining popularity due to lower fees and taxes on capital gains. Unlike index funds and mutual funds, ETFs don’t beat the overall market return. An ETF tries to give the same return as the index that it’s tracking.
ETFs offer diversification for making investments in entire stock markets—in different regions and a specific sector—with greater flexibility.
Please refer to the above chart for various pharmaceutical ETFs that can be used to capitalize on the industry’s growth opportunities.
Health Care Select Sector SPDR Fund (XLV)
The fund was formed in 1998. The generic companies hold around 4.83% of the total holdings. The expense ratio is around 0.16%. It holds net assets of $13,249.73 million.
SPDR S&P Pharmaceuticals ETF (XPH)
The fund has been operational since 2006. The fund is focused on the healthcare sector. It covers big pharmaceutical, specialty, and generic companies. The fund covers generic companies—like Actavis (ACT), Hospira (HSP), and Mylan (MYL)—that hold around 24.6% of the total holding.
iShares U.S. Healthcare ETF (IYH)
The fund was started in 2000. It includes the big pharmaceutical companies like Pfizer and Merck. It also includes the generic companies like Actavis, Mylan, Perrigo (PRGO), and Hospira. The generic companies account for around 5.38% of the total holdings.
First Trust Health Care AlphaDEX Fund (FXH)
The fund has been operational since 2007. Some of the generic companies that the fund holds include Actavis, Mylan, and Mallinckrodt Plc (MNK). They account for 6.74% of the total holdings.
For the latest updates, visit Market Realist’s Healthcare page.