Investing in the pharmaceutical market: how ETFs help you get into the sector at a modest price

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As the name suggests, exchange-traded funds, or ETFs, are a collection of securities that are traded on an exchange and may track a particular index like housing, social causes, or pharmaceuticals.

Since these securities and assets are grouped together, there could be less risk and greater diversification.

If you have investment goals in the pharmaceutical sector, consider ETFs.

“For those looking to invest in a particular sector or industry, such as pharmaceuticals, products like ETFs or mutual funds can be a great place to start,” said Wendy Liebowitz, Vice President and branch manager at Fidelity Investments.

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She explained that pharmaceutical ETFs invest in the stocks of pharmaceutical companies, allowing investors to target their exposure.

A pharmacist assists a customer in a pharmacy. (Stock)

“In general, focusing investments on a specific industry can be beneficial as it can help you pursue potential growth in resilient or innovative industries, diversify your portfolio and manage risk,” Liebowitz said.

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Because ETFs, including pharmaceutical ETFs, invest in many securities, investors benefit from diversification, which can help broaden your exposure to the sector and reduce risk compared to investing in a single stock or duty, she said.

“However, keep in mind that compared to a broad market ETF, sector ETFs can be more volatile given their relatively narrow focus,” Liebowitz warned.

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For some perspective, Todd Rosenbluth, head of research at VettaFi, said healthcare sector ETFs like Health Care Select Sector SPDR and Vanguard Health Care ETF have significant exposure to pharmaceutical companies like Johnson & Johnson and Pfizer. , as well as other less related companies like UnitedHealth Group and Medtronic.

Teleprinter Security Last To change To change %
XLV SPDR SECTOR HEALTH CARE SELECT ETF 129.68 +1.44 +1.12%
VHT VANGUARD WORLD FDS VANGUARD HEALTH CARE ETF 238.50 +3.00 +1.27%
JNJ JOHNSON & JOHNSON 179.52 +2.01 +1.13%
DFP PFIZER INC. 52.31 -0.12 -0.23%
A H UNITEDHEALTH GROUP INC. 517.40 +3.77 +0.73%
MTD PLC MEDTRONIC 91.38 +1.63 +1.82%

However, says Rosenbluth, the SPDR S&P Pharmaceuticals ETF offers more focused exposure to the industry with a mix of large- and small-cap companies.

Teleprinter Security Last To change To change %
XPH SPDR SERIES TRUSTED BY SPDR S&P PHARMACEUTICALS 42.63 +0.63 +1.50%
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