Why Investors Should Consider Pharmaceutical ETFs

In terms of performance, the product generated more than 32% returns year-to-date and nearly 27.8% in the trailing one-year period.

iShares U.S. Pharmaceuticals ETF (IHE)

This ETF tracks the Dow Jones U.S. Select Pharmaceuticals Index and holds 41 securities in its basket. The product has amassed nearly $500 million in assets and trades in volume of roughly 34,000 shares per day, while charging 46 bps a year in fees.

From a securities look, the product is concentrated as the top three holdings – JNJ, PFE and Merck (MRK) – together make up for 27% share in the basket. IHE is a large cap-centric fund accounting for at least 63% of the assets.

The ETF rose over 20.5% so far this year and a similar amount in the trailing one-year period (read: The Comprehensive Guide to Pharmaceutical ETFs).

Bottom Line

The long-term outlook remains promising for pharma ETFs. Pharma will continue to grow no matter what happens with rates, especially given the demographic shift in the U.S. and the insatiable demand for new treatments and drugs for a variety of illnesses.

Thus, these products could be an interesting choice for investors seeking higher returns from the market at this uncertain time.

This article is brought to you courtesy of Eric Dutram.

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