Is Invesco Pharmaceuticals ETF (PJP) a Strong ETF Right Now?

Launched on 06/23/2005, the Invesco Pharmaceuticals ETF (PJP) 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.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

The fund is managed by Invesco. PJP has been able to amass assets over $236.03 million, making 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.14%.

Sector Exposure and Top Holdings

ETFs offer 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.

Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.

When you look at individual holdings, Gilead Sciences Inc (GILD) accounts for about 5.30% of the fund's total assets, followed by Abbott Laboratories (ABT) and Amgen Inc (AMGN).

PJP's top 10 holdings account for about 47.51% of its total assets under management.

Performance and Risk

So far this year, PJP has lost about -3.57%, and is up roughly 0.77% in the last one year (as of 05/09/2025). During this past 52-week period, the fund has traded between $74.59 and $89.61.

PJP has a beta of 0.50 and standard deviation of 16.23% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 31 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) 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 $554.64 million in assets, VanEck Pharmaceutical ETF has $631.68 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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This article originally published on Zacks Investment Research (zacks.com).

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