There are cap-weighted and equal-weight pharma ETFs, but PJP employs a more pure approach to intelligent indexing with a combination emphasis on momentum and quality. Those two themes are increasingly prominent when it comes to ETF indexing. [Index Swaps Lift Sector ETFs]
When investors hear “momentum” pertaining to a health care ETF, the typical reaction is that the fund in question is either heavily tilted toward biotech names, small-caps or both. However, that is not necessarily the case with PJP.
“The other reality is that financial fundamentals are better than ever for biopharmaceutical companies. Business models, product offerings, pipelines, and management quality are considerably better now than they were 10 years ago, resulting in sustainable earnings growth for these companies that is superior to most other sectors of the S&P 500. Another key point is that earnings are stable, as are earnings estimates and guidance. While some stock prices are down more than 20% since mid-summer highs, valuations are attractive and, in fact, quite compelling on a PEG (price earnings per unit of earnings growth) basis,” notes the Seeking Alpha post.
PowerShares Dynamic Pharmaceuticals Portfolio
