The equal-weight XPH offers investors a compelling mix of familiar blue chip pharmaceuticals names along with smaller, more nimble firms. Companies in the latter category are the ones more likely to be working on breakthrough treatments or be subject to mergers and acquisitions that can push shares higher. [Healthcare ETFs up at Least 10% This Year]
The PowerShares Dynamic Pharmaceuticals Portfolio (NYSEArca: PJP), a smart beta pharmaceuticals ETF, has added more than 20% of its $1.98 billion in AUM since the start of 2104.
PJP tracks the Dynamic Pharmaceutical Intellidex Index which evaluates companies for inclusion based on “price momentum, earnings momentum, quality, management action, and value,” according to PowerShares.
The ETF recently got a lift from its weight to Salix Pharmaceuticals (NasdaqGS: SLXP), for which a short bidding war recently occurred. Salix, 3.4% of PJP’s weight, will be sold to Valeant Pharmaceuticals (NYSE: VRX), which outbid Endo Pharmaceuticals (NasdaqGS: ENDP).
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