Pharmaceutical Industry ETF

AAA

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.

INVESTOPEDIA EXPLAINS '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. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  3. Patent Cliff

    A colloquialism to denote the potential sharp decline in revenues ...
  4. Insurance Industry ETF

    A sector-following fund that invests primarily in insurance companies, ...
  5. Sector ETF

    A class of exchange-traded fund that invests in the stocks and ...
  6. ETF Sponsor

    The company or financial institution which creates and administers ...
RELATED FAQS
  1. Which other sectors benefit the most from advances in biotechnology?

    Pharmaceuticals Benefit from Advances in Biotechnology One of the sectors that benefits most strongly from advances in biotechnology ... Read Full Answer >>
  2. Are there ETFs that track the drugs sector?

    There are several exchange traded funds (ETFs) that track the pharmaceutical sector. These are specialized funds that are ... Read Full Answer >>
  3. Can an investor buy leveraged ETFs that track the automotive sector?

    As of 2015, no leveraged exchange-traded funds, or ETFs, track the automotive sector. However, a non-leveraged ETF tracks ... Read Full Answer >>
  4. What are some examples of smart beta ETFs that use passive and active management?

    There are a number of smart beta exchange-traded funds (ETFs) that use passive and active management, including the WisdomTree ... Read Full Answer >>
  5. What is the difference between the QQQ ETF and other indexes?

    QQQ, previously QQQQ, is unlike indexes because it is an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index. The ... Read Full Answer >>
  6. What is the QQQ ETF?

    The PowerShares QQQ, previously known as the QQQQ, is a widely held and traded exchange-traded fund (ETF) that gives investors ... Read Full Answer >>
Related Articles
  1. Economics

    Pharmaceutical Sector: Does The FDA Help Or Harm?

    We look at how the FDA affects the pharmaceutical industry, and how investors can avoid the pitfalls.
  2. Mutual Funds & ETFs

    An Inside Look At ETF Construction

    If you're an investor who likes to understand how and why your investment products work, this article is for you!
  3. Fundamental Analysis

    Evaluating Pharmaceutical Companies

    Learn how to find a healthy pharmaceutical investment in a market full of weak drugs.
  4. Mutual Funds & ETFs

    Investing In The Healthcare Sector

    Perform a thorough checkup to uncover a medical stock with a clean bill of health.
  5. Professionals

    Worried About Stocks? Try on Convertibles

    Convertibles are a good hedge against equity market risk (if you're o.k. with losing a bit of upside potential).
  6. Stock Analysis

    Playing Rising Rates with Ultra-Short Term Bonds

    With rising rates likely, investors may want to consider adding a dose of ultra-short bonds to their portfolios. Here are some ETFs to consider.
  7. Professionals

    Why Investors Are Bailing on Bond ETFs

    Investors are fleeing bond ETFs. Should you follow the herd? Hint: It depends on the type of bond.
  8. Chart Advisor

    How Investors are Profiting from Cyber Crime Fear

    An ETF that has seen significant gains this year in the growing field of cyber security, and the threat and fear of cyber attacks and cyber crime.
  9. Professionals

    Indexing vs. Stock Picking: Which is Better Now?

    Indexing and stock picking both have positive and negative features. One has outperformed the other historically, but which is the better option right now?
  10. Chart Advisor

    ChartAdvisor for June 26 2015

    Weekly technical summary of the major U.S. indexes.

You May Also Like

Hot Definitions
  1. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  2. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  3. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  4. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  5. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!