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A Look at Pharmaceutical ETFs in 2Q17

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Pharmaceutical ETFs

Pharmaceutical ETFs are securities designed for investors who do not have the capacity to hold many stocks but are interested in diversification of their investments within the pharmaceutical sector. Besides diversification, ETFs have other benefits, such as the ability to sell short, buy on margin, and purchase a single unit. Also, the expense ratios for ETFs are much lower than mutual funds’.

The above chart compares ETFs’ returns year-to-date. The rest of this article discusses major ETFs in the pharmaceutical sector and their returns.

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The PowerShares Dynamic Pharmaceuticals ETF (PJP)

This ETF is focused on drug manufacturers and biotechnology companies. The fund has been operational since 2005, and its net assets were $824.5 million as of July 7, 2017. Its holdings include pharmaceutical companies such as Akorn (AKRX), Johnson & Johnson (JNJ), and Merck and Co. (MRK). Its price has risen ~7.2% in 2Q17, while its year-to-date returns were 11.7% as of July 7, 2017.

The Health Care Select Sector SPDR ETF (XLV)

This ETF is focused on pharmaceutical and biotechnology companies. The fund has been operational since 1998, and its net assets were $16.2 billion as of July 7, 2017. Its price has risen ~2.4% in 2Q17, while its year-to-date returns were 14.4% as of July 7, 2017.

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The SPDR S&P Pharmaceuticals ETF (XPH)

This ETF is focused on drug manufacturers and biotechnology companies. This fund tracks an index that represents the pharmaceutical sub-industry portion of the S&P Total Market Index. The fund has been operational since 2006, and its net assets were $450.6 million as of July 7, 2017. Its price has risen ~2.0% in 2Q17, while its year-to-date returns were 9.3% as of July 7, 2017.

The iShares US Pharmaceuticals ETF (IHE)

This ETF is focused on large drug manufacturers such as Pfizer (PFE), Merck and Co. (MRK), and Allergan (AGN). The fund has been operational since 2006, and its net assets were $714.2 million as of July 7, 2017. Its price has risen ~2.7% in 2Q17, while its year-to-date returns were 9.2% as of July 7, 2017.

The VanEck Vectors Pharmaceuticals ETF (PPH)

This ETF is focused on large drug manufacturing companies, and most of its holdings comprise large companies such as Novartis (NVS), AstraZeneca (AZN), and Novo Nordisk (NVO). The fund has been operational since 2011, and its net assets were $306.1 million as of July 7, 2017. Its price has risen ~6.1% in 2Q17, while its year-to-date returns were 10.1% as of July 7, 2017.

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