* (Note: this is the first article in a series of three about pharmaceutical exchange-traded funds (ETFs) *
The pharmaceutical industry is one with two prongs.
There are the small, risky companies that let investors can gamble on purchasing in hopes they can find a buyer, while there also are the giants doing the buying and engaged in all sorts of research, development and production for various drugs. Today, we’re going to discuss a way to invest in the latter stocks through the VanEck Vectors Pharmaceutical ETF (PPH).
This fund invests in just 25 of the biggest and best pharmaceutical companies. For investors looking for exposure to the whole market segment, this investment is a simple one. Many of the larger holdings in this fund are household names or names you might hear about in television advertisements. Its holdings are chosen based on size and liquidity.
Over the last 12 months, this fund has posted a return of 11.43%. It has $227 million in assets, making it not too big, but not too small. PPH pays a modest 1.55% yield, and its expense ratio is 0.42%, which is nothing special. The fund has recovered from a precipitous fall in late March, like the rest of the market, and now is close to its pre-COVID-19 levels.
The top 10 holdings for this fund compose about half of its portfolio. Those stocks include Eli Lilly and Co. (LLY), 5.51%; AbbVie Inc. (ABBV), 5.14%; Novartis AG (NVS), 5.03%; Sanofi (SNY), 5.02%; and AstraZeneca Plc (AZN), 5.00%.
Plus, 63% of PPH’s holdings are based in the United States. The largest components of the remainder are based in the United Kingdom, Switzerland and France, with some of these representing only a single holding.
For investors looking to participate in the profits of the world’s leading names in pharmaceuticals, VanEck Vectors Pharmaceutical ETF (PPH) could be a convenient way to own them all in one place.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.