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Is Invesco Dynamic Pharmaceuticals ETF (PJP) a Strong ETF Right Now?
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Launched on 06/23/2005, the Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $336.24 million, this makes it one of the average sized ETFs in the Health Care ETFs. PJP is managed by Invesco. Before fees and expenses, PJP seeks to match the performance of the Dynamic Pharmaceutical Intellidex Index.
The Dynamic Pharmaceutical Intellidex Index is comprised of stocks of U.S. pharmaceutical companies. It is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Healthcare sector - about 100% of the portfolio.
Looking at individual holdings, Merck & Co Inc (MRK - Free Report) accounts for about 6.99% of total assets, followed by Abbott Laboratories (ABT - Free Report) and Eli Lilly & Co (LLY - Free Report) .
Its top 10 holdings account for approximately 57.16% of PJP's total assets under management.
Performance and Risk
So far this year, PJP has lost about -6.56%, and is down about -3.02% in the last one year (as of 01/26/2022). During this past 52-week period, the fund has traded between $75.59 and $83.17.
The fund has a beta of 0.82 and standard deviation of 21.25% for the trailing three-year period, which makes PJP a high risk choice in this particular space. With about 23 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Pharmaceuticals ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Pharmaceutical ETF (PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index and the iShares U.S. Pharmaceuticals ETF (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index. VanEck Pharmaceutical ETF has $381.23 million in assets, iShares U.S. Pharmaceuticals ETF has $382.22 million. PPH has an expense ratio of 0.35% and IHE charges 0.42%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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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Is Invesco Dynamic Pharmaceuticals ETF (PJP) a Strong ETF Right Now?
Launched on 06/23/2005, the Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $336.24 million, this makes it one of the average sized ETFs in the Health Care ETFs. PJP is managed by Invesco. Before fees and expenses, PJP seeks to match the performance of the Dynamic Pharmaceutical Intellidex Index.
The Dynamic Pharmaceutical Intellidex Index is comprised of stocks of U.S. pharmaceutical companies. It is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Healthcare sector - about 100% of the portfolio.
Looking at individual holdings, Merck & Co Inc (MRK - Free Report) accounts for about 6.99% of total assets, followed by Abbott Laboratories (ABT - Free Report) and Eli Lilly & Co (LLY - Free Report) .
Its top 10 holdings account for approximately 57.16% of PJP's total assets under management.
Performance and Risk
So far this year, PJP has lost about -6.56%, and is down about -3.02% in the last one year (as of 01/26/2022). During this past 52-week period, the fund has traded between $75.59 and $83.17.
The fund has a beta of 0.82 and standard deviation of 21.25% for the trailing three-year period, which makes PJP a high risk choice in this particular space. With about 23 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Pharmaceuticals ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Pharmaceutical ETF (PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index and the iShares U.S. Pharmaceuticals ETF (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index. VanEck Pharmaceutical ETF has $381.23 million in assets, iShares U.S. Pharmaceuticals ETF has $382.22 million. PPH has an expense ratio of 0.35% and IHE charges 0.42%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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.