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Merck and Exchange-Traded Funds

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Exchange-Traded Funds

Exchange-traded funds (or ETFs) are securities that are publicly traded on stock markets, but that track an index, a commodity, or a basket of assets. ETFs are designed for investors who do not have the capacity to hold many stocks, but who are interested in diversified investment within a sector or industry.

The above chart compares ETF returns compared with Merck and Co.’s (MRK) performance over a five-year period. The total return for Merck’s share price on the NYSE from June 2010–May 2015 has been ~17.1%, which is much lower than the ETFs focused on the Pharmaceutical segment. The rest of this article discusses the major ETFs holding Merck stock.

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SPDR Healthcare Select Sector ETF (XLV)

XLV has been operational since 1998, and it has net assets of $13 billion. Merck forms 6.2% of the total assets of this fund. Its total return over the last five years was over 23.2%.

PowerShares Dynamic Pharmaceuticals ETF (PJP)

PJP has been active since 2005, and its net assets total $1.62 billion. Merck forms 5.4% of this fund’s total assets. PJP’s total return over the last five years was over 34.7%.

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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. This fund has been operational since 2006, and its net assets are $1.11 billion. Merck forms 3.5% of XPH’s total assets, and the fund’s total returns over the last five years were over 28.2%.

iShares US Pharmaceuticals Index Fund (IHE)

IHE has been in operation since 2006, and its net assets are $888.97 million. Merck forms nearly 8.5% of the total assets of this fund. The fund’s total return over the last five years was more than 27.9%.

VanEck Vectors Pharmaceutical ETF (PPH)

This fund has been active since 2011, and it has net assets of $345.54 million. Merck and Co. forms over 5% of this fund’s total assets. The fund also holds Merck’s competitors such as Johnson & Johnson (JNJ), Novartis AG (NVS), and Pfizer (PFE). The fund’s total return over the last three years was over 29%.

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