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The Invesco Pharmaceuticals ETF (NYSEMKT:PJP) focuses on concentrated exposure to drug manufacturers with lower historical volatility, while the Invesco S&P 500 Equal Weight Health Care ETF (NYSEMKT:RSPH) provides a more diversified, lower-cost approach to the broader healthcare sector.
Investors seeking healthcare exposure often choose between niche industry concentration and broad sector coverage. This comparison explores two Invesco funds: one that isolates the pharmaceutical industry and another that equal-weights every healthcare constituent in the S&P 500, including medical devices and services firms.
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-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Invesco S&P 500 Equal Weight Health Care ETF is more affordable for investors with an expense ratio of 0.4%. The Invesco Pharmaceuticals ETF carries a higher 0.58% fee but offers a slightly higher trailing payout.
The Invesco S&P 500 Equal Weight Health Care ETF primarily allocates its portfolio to the healthcare and technology sectors, containing 61 holdings in total. Its largest positions include Moderna (NASDAQ:MRNA) at 2.31%, Illumina (NASDAQ:ILMN) at 2.20%, and Revvity (NYSE:PKI) at 2.02%. It was launched in 2006, and has paid $0.22 per share over the trailing 12 months, which on its recent ~$37.3 share price works out to a 0.6% yield.
The Invesco Pharmaceuticals ETF concentrates its investments 100% within the healthcare sector by holding 28 pharmaceutical companies. Its top holdings include AbbVie (NYSE:ABBV) at 5.67%, Pfizer (NYSE:PFE) at 5.58%, and Gilead Sciences (NASDAQ:GILD) at 5.58%. It was launched in 2005, and has paid $1.13 per share over the trailing 12 months, which on its recent ~$121.1 share price works out to a 0.9% yield.
For more guidance on ETF investing, check out the full guide at this link.
Invesco offers two distinct approaches to gaining exposure to the healthcare industry through its Invesco S&P 500 Equal Weight Health Care ETF (RSPH) and Invesco Pharmaceuticals ETF (PJP). Choosing between them depends on your investment objectives.
RSPH is the better fund for those who want broad exposure to the healthcare sector, and that includes pharmaceutical stocks. This diversification helps to protect the ETF's performance from a downturn in pharmaceuticals or another medical industry sub-sector. Its equal weight approach means no one company dominates the ETF's performance. However, its one-year and five-year performance is lower than PJP.
PJP's focus on the pharma industry allows it to capture high-flying pharmaceutical trends and innovations, such as the GLP-1 weight-loss drug boom. This has helped it deliver superior returns compared to RSPH. The ETF employs a variety of criteria for inclusion, which include price and earnings momentum, management action, and value. That said, its narrow sector and stock concentration leaves the fund vulnerable to regulatory changes, drug trial failures, or pricing pressures.
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Robert Izquierdo has positions in Pfizer. The Motley Fool has positions in and recommends AbbVie, Gilead Sciences, Illumina, Moderna, and Pfizer. The Motley Fool has a disclosure policy.
Better Invesco Healthcare ETF: PJP Targeting Pharmaceuticals vs. RSPH's Broader Sector Lens was originally published by The Motley Fool
