Should You Invest in the SPDR S&P Pharmaceuticals ETF (XPH)? – Entrepreneur

Should You Invest in the SPDR S&P Pharmaceuticals ETF (XPH)? – Entrepreneur

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Sector ETF report for XPH
If you’re interested in broad exposure to the Healthcare – Pharma segment of the equity market, look no further than the SPDR S&P Pharmaceuticals ETF (XPH), a passively managed exchange traded fund launched on 06/19/2006.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare – Pharma is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $205.67 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare – Pharma segment of the equity market. XPH seeks to match the performance of the S&P Pharmaceuticals Select Industry Index before fees and expenses.
The S&P Pharmaceuticals Select Industry Index represents the pharmaceuticals sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the US common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Pharmaceuticals Index is a modified equal weight index.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector–about 100% of the portfolio.
Looking at individual holdings, Merck & Co. Inc. (MRK) accounts for about 5.24% of total assets, followed by Organon & Co. (OGN) and Perrigo Co. Plc (PRGO).
The top 10 holdings account for about 45.84% of total assets under management.
Performance and Risk
The ETF has lost about -6.11% so far this year and is down about -18.42% in the last one year (as of 02/08/2022). In that past 52-week period, it has traded between $41.55 and $56.01.
The ETF has a beta of 1 and standard deviation of 24.71% for the trailing three-year period, making it a high risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Pharmaceuticals 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, XPH is a sufficient 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 VanEck Pharmaceutical ETF (PPH) tracks MVIS US Listed Pharmaceutical 25 Index. IShares U.S. Pharmaceuticals ETF has $391.47 million in assets, VanEck Pharmaceutical ETF has $392.75 million. IHE has an expense ratio of 0.42% and PPH charges 0.35%.
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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SPDR S&P Pharmaceuticals ETF (XPH): ETF Research Reports
 
Merck & Co., Inc. (MRK): Free Stock Analysis Report
 
Perrigo Company plc (PRGO): Free Stock Analysis Report
 
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
 
VanEck Pharmaceutical ETF (PPH): ETF Research Reports
 
Organon & Co. (OGN): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
Chris Markoch
Sweta Jaiswal, FRM
Sheraz Mian
Yan Katcharovski
Jean Ginzburg
Krishna Athal
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