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

Sector ETF report for PPH

By
This story originally appeared on Zacks

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

- Zacks

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 are also funds of convenience, offering many ways 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 16, placing it in bottom 0%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $331.53 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.54%.

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, Astrazeneca Plc (AZN) accounts for about 5.19% of total assets, followed by Merck & Co Inc (MRK) and Bristol-Myers Squibb Co (BMY).

The top 10 holdings account for about 50.13% of total assets under management.

Performance and Risk

The ETF has gained about 13.41% and was up about 21.14% so far this year and in the past one year (as of 09/10/2021), respectively. PPH has traded between $58.91 and $77.22 during this last 52-week period.

The ETF has a beta of 0.88 and standard deviation of 20.80% 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 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 Invesco Dynamic Pharmaceuticals ETF (PJP) tracks Dynamic Pharmaceutical Intellidex Index. IShares U.S. Pharmaceuticals ETF has $392.99 million in assets, Invesco Dynamic Pharmaceuticals ETF has $443.45 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 Pharmaceutical ETF (PPH): ETF Research Reports

 

AstraZeneca PLC (AZN): Free Stock Analysis Report

 

Bristol Myers Squibb Company (BMY): Free Stock Analysis Report

 

Merck & Co., Inc. (MRK): Free Stock Analysis Report

 

Invesco Dynamic Pharmaceuticals ETF (PJP): ETF Research Reports

 

iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports

 

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Zacks Investment Research