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Is Invesco Pharmaceuticals ETF (PJP) a Strong ETF Right Now?
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The Invesco Pharmaceuticals ETF (PJP - Free Report) made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
PJP is managed by Invesco, and this fund has amassed over $295.50 million, which makes it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.57% for PJP, making 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
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.
For PJP, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Taking into account individual holdings, Abbvie Inc (ABBV - Free Report) accounts for about 6.72% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Regeneron Pharmaceuticals Inc (REGN - Free Report) .
PJP's top 10 holdings account for about 56.86% of its total assets under management.
Performance and Risk
The ETF has added roughly 16.73% and it's up approximately 15% so far this year and in the past one year (as of 08/29/2024), respectively. PJP has traded between $67.88 and $88.46 during this last 52-week period.
The fund has a beta of 0.58 and standard deviation of 15.55% 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 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.
IShares U.S. Pharmaceuticals ETF (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the VanEck Pharmaceutical ETF (PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index. IShares U.S. Pharmaceuticals ETF has $696.05 million in assets, VanEck Pharmaceutical ETF has $711.62 million. IHE has an expense ratio of 0.39% and PPH charges 0.36%.
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 Pharmaceuticals ETF (PJP) a Strong ETF Right Now?
The Invesco Pharmaceuticals ETF (PJP - Free Report) made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
PJP is managed by Invesco, and this fund has amassed over $295.50 million, which makes it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.57% for PJP, making 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
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.
For PJP, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Taking into account individual holdings, Abbvie Inc (ABBV - Free Report) accounts for about 6.72% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Regeneron Pharmaceuticals Inc (REGN - Free Report) .
PJP's top 10 holdings account for about 56.86% of its total assets under management.
Performance and Risk
The ETF has added roughly 16.73% and it's up approximately 15% so far this year and in the past one year (as of 08/29/2024), respectively. PJP has traded between $67.88 and $88.46 during this last 52-week period.
The fund has a beta of 0.58 and standard deviation of 15.55% 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 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.
IShares U.S. Pharmaceuticals ETF (IHE - Free Report) tracks Dow Jones U.S. Select Pharmaceuticals Index and the VanEck Pharmaceutical ETF (PPH - Free Report) tracks MVIS US Listed Pharmaceutical 25 Index. IShares U.S. Pharmaceuticals ETF has $696.05 million in assets, VanEck Pharmaceutical ETF has $711.62 million. IHE has an expense ratio of 0.39% and PPH charges 0.36%.
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.