Taking A Look At Two Pharma ETFs (IHE, PPH)

When it comes to ETF plays on the domestic pharma sector, investors have two options when it comes to playing the blue chip names in the space. The Pharmaceutical HOLDRs (AMEX: PPH) and the iShares Dow Jones US Pharmaceuticals ETF (NYSE: IHE) are the ETFs to consider.

On the surface, IHE and PPH look similar as both ETFs count many of the same names among their top holdings. Abbott Labs (NYSE: ABT), Merck (NYSE: MRK) and Pfizer (NYSE: PFE) are all among the top-10 holdings in both ETFs.

Yet over the last three months, IHE has outperformed PPH by about 10% even though PPH has a much higher average daily volume.

IHE is more diversified. It's biggest holding, Johnson & Johnson (NYSE: JNJ) accounts for about 8% of assets, where as the top four holdings in PPH, Abbott, JNJ, Merck and Pfizer account for 55% of that ETF's assets.

So the bottom line is, the ETF Profesor says lean toward IHE if you're considering purchasing a pharma ETF.