The pharmaceutical industry is set to experience exponential growth in the coming years as new drugs and treatments emerge, leading to the development of specialized ETFs designed to target key areas within the health sector. In this article, we’ll explore the five biggest pharmaceutical ETFs currently available for investors in 2023, their performance over the past year, and the potential for growth in the future.
First on the list is the iShares NASDAQ Biotechnology ETF (IBB). This ETF follows the NASDAQ Biotechnology Index, which tracks an array of biotechnology, diagnostics, drug delivery, and medical device stocks from leading bio-pharmaceutical companies. Over the last year, the IBB has returned more than 40% with a relatively low expense ratio of 0.47%.
The second biggest pharmaceutical ETF is SPDR S&P Biotech ETF (XBI). This ETF tracks the S&P Biotechnology Select Industry Index which grants exposure to cutting edge companies in the biotechnology sector. The XBI has gained over 31% over the last year and has an expense ratio of 0.35%.
The third largest ETF in the pharmaceutical space is the iShares US Pharmaceuticals ETF (IHE). This ETF is based on the Dow Jones U.S. Pharmaceuticals Index. The IHE has returned over 25% over the last year, with an expense ratio of 0.42%.
Next up is the VanEck Vectors Pharmaceutical ETF (PPH). This ETF follows the MVIS Global Pharmaceuticals Index which tracks stocks from companies involved in the research, development, manufacture, and sales of pharmaceutical products. The PPH has a year-to-date return of over 30% and an expense ratio of 0.45%.
Finally, the largest pharmaceutical ETF is the Health Care Select Sector SPDR Fund (XLV). This ETF replicates the total return performance of the Health Care Select Sector Index, which consists of a range of healthcare stocks. With a year-to-date return of over 36%, the XLV has positioned itself as one of the top performing ETFs of the year with an expense ratio of 0.13%.
Overall, the performance of the top 5 pharmaceutical ETFs over the past year has been impressive with the majority returning upwards of 30%. As the industry continues to grow and develop new treatments and products, pharmaceutical ETFs are likely to remain some of the most attractive investments for investors in the coming years.
