Which Pharmaceuticals ETF Is the Better Buy: iShares’ IHE or Invesco’s PJP?

As of 2026-09-28, iShares U.S. Pharmaceuticals ETF (IHE) returned 49.3% over the trailing year versus 41.0% for Invesco Pharmaceuticals ETF (PJP), with lower fees (0.37% vs. 0.58%) and a higher yield (1.4% vs. 0.9%). Over five years, $1,000 grew to $1,824 in IHE and $1,722 in PJP, while maximum drawdowns were 16.0% and 17.5%, respectively. IHE holds 53 stocks but has over 45% of assets in Eli Lilly and Johnson & Johnson; PJP holds 28 stocks and uses value, growth, and momentum factors with more aggressive individual-stock weight caps.

Analysis

The key exposure is not “broad versus concentrated” in the abstract: IHE’s outcome is unusually dependent on LLY and JNJ, while PJP limits single-name weights but adds factor and rebalancing risk. IHE therefore behaves partly like a leveraged expression of continued LLY leadership, with JNJ adding a different set of product, litigation, and business-mix risks. Its larger holding count does not remove that top-two dependence. PJP is less exposed to a single GLP-1 winner; it could hold up better if returns broaden to other drugmakers, but its value/growth/momentum screen can lag in a narrow momentum-led market and may introduce turnover and style reversals.

Near term, the trailing-return comparison is a weak signal for future relative performance after a sharp sector run. Over 1–3 months, the important catalysts are clinical and commercial updates for obesity drugs, pipeline read-throughs, and any pricing or reimbursement developments. Over 6–18 months, patent expirations, successful pipeline replacement, and acquisition economics will determine whether the rally broadens beyond a few large franchises. The article provides no current valuations, flows, full holdings, or factor attribution; verify these before sizing a relative trade. The contrarian point: IHE is presented as a dependable diversified core, but its disclosed top-two weights make it a concentrated active bet in practice. Conversely, PJP’s lower single-name weights are not inherently safer if its factor tilts become out of favor.

Key Decisions for Investors

• Do not rotate into either ETF solely on trailing returns or headline yield/cost differences. For a passive sector allocation, IHE’s fee advantage matters over time, but size it as a concentrated LLY/JNJ exposure rather than a broad pharmaceutical basket.
• Watch a conditional relative-value setup: consider long PJP versus short IHE only if performance leadership broadens beyond LLY and breadth/earnings revisions improve across PJP’s holdings. Falsify the setup if LLY continues to lead on operating results or PJP’s factor screen persistently underperforms; check current holdings and factor attribution first.
• For the next 1–3 months, monitor LLY obesity-drug trial, supply, and reimbursement updates, plus sector pricing-policy developments. Negative commercial or policy news would likely hit IHE harder through concentration; a strong LLY update could widen its relative advantage.
• Treat PJP’s factor methodology as a source of style risk, not a guaranteed source of alpha. Reassess if its relative return weakness coincides with worsening earnings breadth or material holdings changes; absent that evidence, the ETF comparison alone does not justify a trade.