Invesco Pharmaceuticals ETF (NYSEMKT:PJP) offers concentrated U.S. pharma exposure, while iShares Global Healthcare ETF (NYSEMKT:IXJ) provides a more diversified, lower-cost global approach with higher assets under management and dividend yields.
Investors seeking exposure to the medical sector often choose between broad global baskets and targeted industry funds. This comparison examines how a concentrated pharmaceutical strategy compares against a diversified global healthcare approach, highlighting differences in cost, regional focus, and historical total returns for these two funds.
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the close of July 16.
The iShares fund is more affordable with a 0.40% expense ratio compared to 0.57% for its peer. It also offers a higher payout, providing a 1.50% trailing-12-month distribution yield for income-focused investors.
The iShares Global Healthcare ETF targets 100% exposure to global healthcare stocks. It holds 110 securities, and its largest positions include Eli Lilly (NYSE:LLY) at 10.9%, Johnson & Johnson (NYSE:JNJ) at 7%, and AbbVie Inc (NYSE:ABBV) at 5.1%. The fund was launched in 2001. iShares Global Healthcare ETF has paid $1.44 per share over the trailing 12 months, which on its recent ~$100 share price works out to a 1.50% yield.
The Invesco Pharmaceuticals ETF focuses specifically on U.S. healthcare stocks. It holds a concentrated portfolio of 29 securities, and its largest positions include AbbVie Inc at 5.6%, Eli Lilly at 5.4% and Johnson & Johnson at 5.3%. The fund was launched in 2005. Invesco Pharmaceuticals ETF has paid $1.06 per share over the trailing 12 months, which on its recent ~$119 share price works out to a 0.90% yield.
Both funds are good choices for healthcare exposure, and they are similar in some ways. Perhaps surprisingly, even though IXJ holds nearly four times as many equities as PJP, they each allocate a large share of their assets to the top 10 holdings, at 47% for IXJ and 48% for PJP. And even while IXJ looks beyond the U.S. border for stocks, the U.S. still commands 73% of assets, followed by Switzerland at 10% and the U.K. at 5.5%.
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