Pharmaceutical Industry ETF

DEFINITION of 'Pharmaceutical Industry ETF'

A sector-following fund that invests in developers and manufacturers of pharmaceuticals, with the objective of matching the investment performance of an underlying pharmaceutical index. Since it invests largely in drug companies, a pharmaceutical ETF has a narrower focus than a broad healthcare ETF.

BREAKING DOWN 'Pharmaceutical Industry ETF'

While an ETF may hold stocks either in proportion to their weight in an underlying index or in equal weights, this distinction is especially critical for a pharmaceutical ETF. By giving smaller companies the same percentage weighting as large companies, an equal-weighted pharmaceutical ETF may tend to outperform an ETF that is heavily concentrated in the mega-cap companies.

RELATED TERMS
  1. Semiconductor Industry ETF

    A sector-following fund that invests in developers, manufacturers ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Inverse ETF

    An exchange-traded fund (ETF) that is constructed by using various ...
  4. Index ETF

    Exchange-traded funds that follow a specific benchmark index ...
  5. Stock ETF

    A security that tracks a particular set of equities, similar ...
  6. Synthetic ETF

    An investment that mimics the behavior of an exchange-traded ...
Related Articles
  1. Mutual Funds & ETFs

    FPHAX: Overview of Fidelity Select Pharmaceuticals Fund

    Learn about the pharmaceutical industry, including the two main threats it faces in 2016 and an analysis of the Fidelity Select Pharmaceutical Portfolio.
  2. Mutual Funds & ETFs

    5 Hot ETFs You Don't Know About

    There are more than 1,000 ETFs currently offered to investors. Here are five that have seen impressive growth as of late.
  3. Mutual Funds & ETFs

    4 Things to Know Before Choosing an ETF

    ETFs are a low-cost way to get exposure to different markets. But they're not all the same. Investors should research the following key information regarding the ETF before buying it.
  4. Mutual Funds & ETFs

    How To Pick The Best ETF

    Of the hundreds of exchange-traded funds on the market, some are bound to fail. Learn how to pick the best of the bunch.
  5. Stock Analysis

    4 ETFs To Play A Booming Healthcare Sector

    The healthcare sector is performing the best so far in 2013. We look at four ETFs to play the sector's momentum.
  6. Mutual Funds & ETFs

    Four Key Pharmaceuticals ETFs To Consider

    ETF funds are now very liquid investments and are suitable to investors who seek to match the price performance of the indexes without the cost of owning shares. PJP is the most liquid ETF, followed ...
  7. Mutual Funds & ETFs

    A Look At the Growth Of the ETF Industry

    Explore the phenomenal growth rate of the ETF industry, and learn some of the principal reasons why ETFs are projected to continue to grow at a rapid pace.
  8. Investing Basics

    The Advantages of ETFs Compared to Index Funds

    With the ongoing ETF boom, ETFs gain more variety and increased competition in the market leads to further investors' advantages compared to index funds.
  9. Mutual Funds & ETFs

    A Quick Guide To Healthcare ETFs

    The healthcare industry offers a broad variety of sector ETFs but it’s difficult to avoid exposure to pharmaceuticals and biotechnology .
  10. Top ETFs and What They Track: Introduction to ETFs

    Investopedia explains: An Exchange-Traded Fund (ETF) is an investment fund that tracks an index, specific asset or basket of assets to which it is pegged.
RELATED FAQS
  1. What metrics are often used to evaluate companies in the drugs sector?

    Learn about some of the equity evaluation metrics that are most frequently used for examining companies in the pharmaceutical ... Read Answer >>
  2. Do ETFs pay capital gains?

    Learn about exchange-traded funds (ETFs), which can generate capital gains for their shareholders due to occasional and substantial ... Read Answer >>
  3. Is there an ETF composed of other ETFs?

  4. Are ETFs required to pay out a percentage of income as dividends?

    The exchange-traded fund (ETF) is a relatively new investment vehicle, hitting the market in 1993. A fund company can create ... Read Answer >>
  5. What's the difference between an index fund and an ETF?

    Learn about the difference between an index fund and an exchange-traded fund and how index fund investing compares to value ... Read Answer >>
  6. What types of fees are incurred by purchasing ETFs?

    Understand all the various costs, both explicit and hidden, involved in trading exchange-traded funds, or ETFs, and see how ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center