The State Street SPDR S&P Pharmaceuticals ETF (XPH) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by State Street Investment Management. It has amassed assets over $505.22 million, making it one of the average sized ETFs in the Health Care ETFs. XPH, before fees and expenses, seeks to match the performance of the S&P Pharmaceuticals Select Industry Index.
The S&P Pharmaceuticals Select Industry Index represents the pharmaceuticals sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Pharmaceuticals Index is a modified equal weight index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It's 12-month trailing dividend yield comes in at 0.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
XPH's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
Looking at individual holdings, Crinetics Pharmaceuticals In (CRNX) accounts for about 3.71% of total assets, followed by Definium Therapeutics Inc (DFTX) and Mbx Biosciences Inc (MBX).
Its top 10 holdings account for approximately 24.2% of XPH's total assets under management.
Performance and Risk
So far this year, XPH has added roughly 25.8%, and is up roughly 68.6% in the last one year (as of 08/07/2026). During this past 52-week period, the fund has traded between $43.17 and $70.34.
The fund has a beta of 0.58 and standard deviation of 20.31% for the trailing three-year period, which makes XPH a high risk choice in this particular space. With about 67 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P Pharmaceuticals ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Pharmaceutical ETF (PPH) tracks MVIS US Listed Pharmaceutical 25 Index and the iShares U.S. Pharmaceuticals ETF (IHE) tracks Dow Jones U.S. Select Pharmaceuticals Index. VanEck Pharmaceutical ETF has $937.64 million in assets, iShares U.S. Pharmaceuticals ETF has $1.66 billion. PPH has an expense ratio of 0.36% and IHE changes 0.38%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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State Street SPDR S&P Pharmaceuticals ETF (XPH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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