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. Why would an investor consider purchasing electronic stocks for their portfolio?

    An investor would consider purchasing electronics stocks because that sector provides many opportunities for both quick profits ... Read Full Answer >>
  4. What is the automotive sector?

    In the world of finance, the automotive sector represents the financial performance and economic variables related to automobile ... Read Full Answer >>
  5. What is the best way to get exposure to electric cars when investing in the automotive ...

    Investors interested in electric cars have a variety of options. Automakers such as Tesla Motors exclusively manufacture ... Read Full Answer >>
  6. Where can I buy covered call ETFs (exchange-traded funds)?

    Covered calls can be traded through any major retail broker. Investors need to have their brokerage accounts approved for ... 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

    Beware: These Bond Funds Act Like Stocks

    Beware of bond funds that act like stocks.
  6. Mutual Funds & ETFs

    U.S. Investors Are Seeking Opportunities Overseas

    A latest analysis leads to believe that many investors are applying a spring cleaning approach to their portfolios, rebalancing as the 1st quarter ended.
  7. Options & Futures

    Key Factors Of The Russell 2000 Index

    The Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end of the capitalization spectrum.
  8. Chart Advisor

    Interested in Growth Stocks? See These 4 ETFs

    Given the rise in popularity of growth ETFs, there are several interesting growth stock choices for investors.
  9. Chart Advisor

    ChartAdvisor for April 17 2015

    A weekly technical summary of the major U.S. indexes.
  10. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building your diversified bond portfolio.

You May Also Like

Hot Definitions
  1. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  2. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  3. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  4. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  6. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
Trading Center