XPH vs Competing Pharma ETFs: What Should Your Portfolio Hold?

With over $208 million in assets, the State Street SPDR S&P Pharmaceuticals ETF (XPH) offers investors a straightforward way to gain healthcare sector exposure. But is it the right choice for your ETF investing strategy? Let’s break down the numbers and compare.

Performance That Catches Attention

Year-to-date returns tell part of the story. XPH has delivered 19.46% gains so far this year, while climbing 28.24% from its 52-week low of $36.65 to a high of $54.78. These figures suggest solid momentum, though performance alone shouldn’t drive your decision.

The risk profile deserves attention too. With a beta of 0.61 and a standard deviation of 18.94% over three years, this fund carries moderate-to-high volatility. The fund’s 53 holdings help distribute single-stock risk, but investors must understand they’re accepting meaningful price swings.

Cost Efficiency: Where XPH Shines

Expense ratios matter more than most investors realize. XPH’s 0.35% annual fee ranks among the lowest in the pharmaceutical ETF space, directly boosting long-term returns. The 0.92% trailing dividend yield provides modest income for passive investors seeking stable cash flow.

Compare this to peers: iShares U.S. Pharmaceuticals ETF (IHE) charges 0.38% on a $779.75 million asset base, while VanEck Pharmaceutical ETF (PPH) charges 0.36% managing $1.19 billion. The difference between 0.35% and 0.38% sounds minor until you calculate it over decades.

Inside the Portfolio

XPH tracks the S&P Pharmaceuticals Select Industry Index, which represents U.S.-listed pharmaceutical companies across major exchanges. The portfolio concentrates 99.9% in healthcare, making it a pure-play sector bet.

Top holdings reveal the fund’s makeup: Crinetics Pharmaceuticals (CRNX) comprises 3.31% of assets, followed by Tarsus Pharmaceuticals (TARS) and Corcept Therapeutics (CORT). These three names alone show how concentrated the top positions can be—the 10 largest holdings represent 29.03% of total assets. This concentration requires monitoring, as individual company news can meaningfully impact returns.

Why ETF Investing in Pharma Makes Sense

Passive pharma exposure through sector ETFs offers diversification you couldn’t easily replicate alone. Holding 53 distinct pharmaceutical companies eliminates the need to pick individual winners or losers. The structure also provides daily transparency—you always know what’s in the fund.

State Street’s SPDR version carries a Zacks ETF Rank of 3 (Hold rating), meaning it’s a credible option for core portfolio exposure, though not necessarily a top-tier recommendation.

The Competitive Landscape

Three major pharma ETF options dominate this space. Beyond XPH, both IHE (tracking the Dow Jones U.S. Select Pharmaceuticals Index) and PPH (tracking the MVIS US Listed Pharmaceutical 25 Index) offer similar exposure with marginally different fee structures and underlying indexes.

PPH’s larger asset base ($1.19 billion vs XPH’s $208.47 million) suggests it attracts more investor capital, though size alone doesn’t guarantee superior performance. Each fund weights holdings differently—PPH uses a top-25 concentration approach, while XPH spreads across 53 names.

Making Your ETF Investing Decision

For buy-and-hold investors, XPH’s combination of low costs, reasonable diversification, and established track record makes it a viable choice. The 0.35% expense ratio compounds your returns over time, and the fund has been operating successfully since June 2006—nearly 19 years of consistency matters.

However, don’t assume one ETF fits all strategies. Compare your options directly: examine the specific holdings that align with your pharmaceutical thesis, verify the fee differences against your expected holding period, and assess whether you need pure pharma exposure or would prefer broader healthcare exposure.

The pharmaceutical sector’s long-term tailwinds—aging populations, drug pipeline expansion, pricing dynamics—suggest owning this space makes strategic sense. Whether you choose XPH, IHE, or PPH depends on your specific preferences around concentration, expenses, and index methodology. All three represent legitimate entry points into ETF investing within healthcare.