Amid a flurry of industry consolidation, among other factors, the health care sector is once again on fire in 2015 with each of the 10 best non-leveraged sector exchange traded funds being health care funds.
That lineup is dominated by biotech ETFs with seven such funds ranking among the top 10, but two of the other three are pharmaceuticals funds with one of those two being the PowerShares Dynamic Pharmaceuticals Portfolio (NYSEArca: PJP). The PowerShares Dynamic Pharmaceuticals Portfolio earns its place among the 10 best sector ETFs this year with a 22.7% gain heading into the start of trading Monday.
PJP is a departure from the traditional market capitalization-weighted health care ETF in that its underlying index evaluates companies for inclusion based on “price momentum, earnings momentum, quality, management action, and value,” according to PowerShares. [A Fabulous Pharma ETF]
“With recent view-topping earnings reports, they’re proving their mettle for successful investing . Gilead gained 2% Wednesday after crushing earnings estimates and raising sales guidance. The California-based company, an HIV drug leader, is now a formidable player in the hepatitis C market with its blockbuster Sovaldi,” according to Investor’s Business Daily.
Gilead (NasdaqGS: GILD) is PJP’s fourth-largest holding at a weight of almost 5%. Amgen (NasdaqGS: AMGN), another biotech titan that recently crushed earnings, is PJP’s second-largest holding at a weigh of 5.1%.
PJP trims some of the volatility associated with biotech and specialty pharmaceuticals stocks with allocations to blue-chip pharmaceuticals names. For example, Dow components Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ) and Merck (NYSE: MRK) combine for nearly 15% of the ETF’s weight.
However, if there is one thing PJP has recently become known for, aside from its stellar returns, it is being front-and-center in the pharmaceuticals industry consolidation. That theme, which has become increasingly prominent this year, has shined added light on the the $2.15 billion PJP, an ETF that recently celebrated its tenth anniversary. [Pharma ETFs Like Mylan-for-Perrigo News]
As home to companies such as Allergan (NYSE: AGN), Perrigo (NasdaqGS: PRGO) and Mylan (NYSE: MYL), among others, PJP is awash in specialty pharmaceuticals buyers and sellers. For the moment, PJP’s 24-stock lineup is probably littered more with buyers than sellers, the result of the ETF’s weights to the largest biotech stocks and the aforementioned blue-chip pharma names. However, several of PJP’s other holdings have been bandied about as potential targets.
PowerShares Dynamic Pharmaceuticals Portfolio
