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

Designed to provide broad exposure to the Health Care ETFs category of the market, the Invesco Pharmaceuticals ETF (PJP) is a smart beta exchange traded fund launched on 06/23/2005.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.But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.Fund Sponsor & IndexManaged by Invesco, PJP has amassed assets over $265.19 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 ExpensesFor ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.PJP's 12-month trailing dividend yield is 1.04%.Sector Exposure and Top HoldingsEven though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.For PJP, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.When you look at individual holdings, Johnson & Johnson (JNJ) accounts for about 5.25% of the fund's total assets, followed by Gilead Sciences Inc (GILD) and Abbvie Inc (ABBV).Its top 10 holdings account for approximately 46.6% of PJP's total assets under management.Performance and RiskThe ETF has gained about 12.73% and is up about 8.47% so far this year and in the past one year (as of 09/10/2025), respectively. PJP has traded between $74.59 and $92.87 during this last 52-week period. The ETF has a beta of 0.50 and standard deviation of 15.57% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers .AlternativesInvesco 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 $582.48 million in assets, VanEck Pharmaceutical ETF has $628.46 million. IHE has an expense ratio of 0.38% and PPH changes 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 ETFsBottom LineTo 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco Pharmaceuticals ETF (PJP): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks