The pharmaceutical industry contains many large and powerful companies. Ongoing developments in the field of medicine lead to the testing and creation of new drugs daily. However, in some cases, these companies produce drugs that result in recalls, serious side effects, or failure to achieve the advertised results.
Why Exchange-Traded Funds?
As an investor, the size and volatility of the pharmaceutical sector can create numerous profitable trading opportunities. If you feel that your portfolio could benefit from some exposure to this sector, you can invest in this industry in different ways.
You might consider buying shares of individual pharmaceutical companies. This could be an index or even a mutual fund targeting specific specialties or representing the sector as a whole. But you won’t want to miss the potential opportunities that come with exchange-traded funds (ETFs). Be sure to research several pharmaceutical ETFs to see if they suit your needs.
Exchange-traded funds come with many advantages over mutual funds. These benefits include lower fees, easier transactions than indexes, and better sector diversification than individual stocks. They also provide tax benefits, such as reduced capital gains taxes due to lower trading within the fund.
If you’re looking for immediate exposure to the pharmaceutical sector through one simple trade, pharmaceutical ETFs might be the optimal way to do so.
Do Your Necessary Research
Before making any trades, be sure to consult with your financial advisor, broker, or financial professional. Research each pharmaceutical ETF individually and gain a good understanding of how the funds work and how they interact with different market conditions.
As with any investment (be it an ETF or otherwise), conduct the necessary research to make informed decisions based on your risks and goals. No investment is free of risks, so make sure you are aware of the advantages and disadvantages of any trade or, in this case, a pharmaceutical ETF.
If you are looking for some relevant ETFs, the following lists can help you get started. The first list includes healthcare ETFs, along with an additional list for biotech ETFs.
List of Healthcare ETFs:
- CURE: Direxion Daily Healthcare Bull 3X Shares ETF
- FXH: First Trust Health Care AlphaDEX ETF
- IHF: iShares U.S. Health Care Provider ETF
- IXJ: iShares Global Healthcare Sector ETF
- IYH: iShares U.S. Healthcare ETF
- PTH: Invesco DWA Healthcare Momentum ETF
- RXD: ProShares UltraShort Health Care ETF
- RXL: ProShares Ultra Health Care ETF
- RYH: Invesco S&P 500 Equal Weight Health Care ETF
- VHT: Vanguard Health Care ETF
- XHE: SPDR S&P Health Care Equipment ETF
- XHS: SPDR S&P Health Care Services ETF
List of Biotech ETFs:
- BBH: VanEck Vectors Biotech ETF
- BIB: ProShares Ultra Nasdaq Biotechnology ETF
- BIS: ProShares UltraShort Nasdaq Biotechnology ETF
- FBT: First Trust NYSE Arca Biotechnology Index Fund
- IBB: iShares Biotechnology ETF
- PBE: Invesco Dynamic Biotechnology & Genome ETF
- XBI: SPDR S&P Biotech ETF
Tip: Before investing in any ETF, be sure to read and understand the fund’s documents, technical analysis, and historical performance of the fund. You may also want to consult with a financial advisor for personalized advice tailored to your circumstances.
Sources:
U.S. Securities and Exchange Commission. “Investor Bulletin: Exchange-Traded Funds (ETFs).”
iShares. “iShares U.S. Pharmaceuticals ETF.”
Invesco. “Invesco Dynamic Pharmaceuticals ETF.”
State Street Global Advisors. “SPDR S&P Pharmaceuticals ETF.”
Source: https://www.thebalancemoney.com/use-pharmaceutical-etfs-to-invest-in-the-pharma-sector-1215197
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