Pharmaceutical exchange-traded funds (ETFs) offer investors access to a basket of U.S.-based and foreign stocks of drug manufacturers and related companies in a single investment. Stocks included in these funds are Pfizer, Inc. (PFE) and Merck & Co., Inc. (MRK), two major drug companies, as well as biotech firms and smaller, fast-growing names. Many of the ETFs are dominated by Chinese companies such as Jiangsu Hengrui Medicine Co. Ltd. (600276:SHH). 10 pharmaceutical ETFs are available to investors, excluding leveraged and inverse funds. These funds offer an alternative to investments in individual stocks, which can be riskier.
The best pharmaceutical ETF for Q1 2020 is the KraneShares MSCI All China Health Care Index ETF (KURE). Below, we’ll look at the top 3 pharmaceutical ETFs as of February 12, 2020. While many of these stocks trade on multiple stock exchanges globally, ETFdb.com in almost all cases, below, lists only their Hong Kong ticker.
- Performance over 1 year: 30.0%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 0.22%
- 3-Month Average Daily Volume: 14,675
- Assets Under Management: $25.4 million
- Inception Date: February 1, 2018
- Issuing Company: KraneShares
KURE follows the MSCI China All Shares Health Care 10/40 Index, selecting a group of large-cap, China-based pharmaceuticals companies for its portfolio. Currently, the top stock in the KURE basket is Jiangsu Hengrui Medicine Co., Ltd. (600276:SHH), a maker of drugs and healthcare products; CSPC Pharmaceutical Group, Ltd. (1093:HKG), a maker of active drug ingredients and formulations; and Sino Biopharmaceutical, Ltd. (1177:HKG), a manufacturer of treatments for hepatitis and ophthalmia.
- Performance over 1 year: 24.5%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 0.72%
- 3-Month Average Daily Volume: 3,943
- Assets Under Management: $2.9 million
- Inception Date: December 7, 2018
- Issuing Company: Global X
The Global X MSCI China Health Care ETF uses the MSCI China Health Care 10/50 Index as a benchmark. Like KURE, this fund includes Chinese pharmaceuticals companies, but in this case, companies with a wide variety of market caps are part of the portfolio. The current top holdings for CHIH include Wuxi Biologics Cayman, Inc. (2269:HKG), an integrated technology platform company for biologics drug development; Sino Biopharmaceutical, Ltd.; and Alibaba Health Information Technology, Ltd. (241:HKG), an integrated healthcare information and content services provider.
- Performance over 1 year: 21.2%
- Expense Ratio: 0.79%
- Annual Dividend Yield: 0.15%
- 3-Month Average Daily Volume: 5,322
- Assets Under Management: $12.4 million
- Inception Date: August 14, 2018
- Issuing Company: Exchange Traded Concepts
Like the other two top pharmaceutical ETFs, CHNA is also focused on Chinese names, and in particular those found within the Loncar China BioPharma Index. This multi-cap fund weights its top 6 holdings relatively evenly, with the top position currently accounting for just 4.4% of the portfolio. The top three holdings for CHNA include Wuxi Biologics Cayman, Inc.; WuXi AppTec Co., Ltd. (2359: HKG), an R&D and manufacturing services company; and Sino Biopharmaceutical, Ltd.