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

·3-min read

Designed to provide broad exposure to the Healthcare - Pharma segment of the equity market, the VanEck Vectors Pharmaceutical ETF (PPH) is a passively managed exchange traded fund launched on 12/20/2011.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Investor-friendly, sector ETFs provide many options 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 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $243.78 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 1.60%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Eli Lilly And Co (LLY) accounts for about 6.40% of total assets, followed by Johnson & Johnson (JNJ) and Catalent Inc (CTLT).

The top 10 holdings account for about 49.83% of total assets under management.

Performance and Risk

The ETF has gained about 5.72% and is up roughly 17.77% so far this year and in the past one year (as of 05/07/2021), respectively. PPH has traded between $58.91 and $71.06 during this last 52-week period.

The ETF has a beta of 0.89 and standard deviation of 20.75% 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 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 $359.20 million in assets, Invesco Dynamic Pharmaceuticals ETF has $360.64 million. IHE has an expense ratio of 0.42% 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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VANECK-PHARMA (PPH): ETF Research Reports
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
Catalent, Inc. (CTLT) : Free Stock Analysis Report
 
INVS-DYN PHARM (PJP): ETF Research Reports
 
ISHARS-US PHARM (IHE): ETF Research Reports
 
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