Invesco Pharmaceuticals ETF vs. iShares Biotechnology ETF: Which Is the Better Buy?
2026-10-23 05:41
•Katie Brockman •The Motley Fool
•••• ••••••• Axe Cap view
Pharmaceuticals vs. Biotech ETFs: What’s Right for JSE Investors?
When choosing health sector ETFs, South African investors should weigh risk tolerance and income needs carefully.
The global health sector split between pharmaceuticals and biotech ETFs tells a familiar story for local investors eyeing offshore exposure. The Invesco Pharmaceuticals ETF (PJP) favors stability and income, offering a higher dividend yield near 0.9%, but it carries heftier fees and lagged the iShares Biotech ETF (IBB) in growth. The iShares fund’s broader basket of smaller, innovative names drove nearly 38% returns last year but comes with sharp ups and downs — a near 40% peak loss in some periods. For JSE watchers, the rand’s recent strength against the dollar dampens off-shore gains but also cushions import cost inflation for pharmaceutical ingredients. If you lean towards safety and steady payouts, PJP fits better. If growth and innovation excite you, IBB warrants a spot. Beware, though, that biotech’s volatility can wipe out gains quickly, especially if global liquidity tightens or breakthrough drugs falter in trials. this is just our opinion and not financial advice
South African investors should consider a small allocation to IBB for growth, but keep the bulk in PJP for steadier income and lower risk. Watch USD/ZAR closely as currency swings can skew returns.
- PJP
- IBB
- USD/ZAR
- High volatility in biotech sector
- Rand depreciation impacting offshore returns
6/10
The article compares two healthcare sector ETFs: Invesco Pharmaceuticals ETF (PJP), which focuses on 27 pharmaceutical companies, and iShares Biotechnology ETF (IBB), which covers 243 biotech stocks. IBB has a lower expense ratio (0.44% vs 0.58%) and outperformed over the past year (37.7% vs 33.9% return), but PJP offers higher dividend yield (0.92% vs 0.16%) and lower volatility. The choice depends on investor risk tolerance and portfolio goals.
Our take is based on reporting first published by The Motley Fool.