Should You Invest in the iShares U.S. Pharmaceuticals ETF (IHE)?

Designed to provide broad exposure to the Healthcare - Pharma segment of the equity market, the iShares U.S. Pharmaceuticals ETF (IHE) is a passively managed exchange traded fund launched on May 1, 2006.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Pharma is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.02 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. IHEIHE-- seeks to match the performance of the Dow Jones U.S. Select Pharmaceuticals Index before fees and expenses.

The Dow Jones U.S. Select Pharmaceuticals Index is free-float adjusted market capitalization-weighted index. It includes pharmaceutical companies such as manufacturers of prescription or over-the-counter drugs or vaccines, but excludes producers of vitamins.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.38%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.71%.

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.

This ETF has heaviest allocation in the Healthcare sector -- about 100% of the portfolio.

The top 10 holdings account for about 79% of total assets under management.

Performance and Risk

So far this year, IHE return is roughly 3.35%, and is up roughly 23.29% in the last one year (as of 03/09/2026). During this past 52-week period, the fund has traded between $61 and $91.84.

The ETF has a beta of 0.50 and standard deviation of 15.84% for the trailing three-year period, making it a high risk choice in the space. With about 59 holdings, it effectively diversifies company-specific risk.

Alternatives

iShares U.S. Pharmaceuticals ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IHE is an excellent option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Invesco Pharmaceuticals ETF (PJP) tracks Dynamic Pharmaceutical Intellidex Index and the VanEck Pharmaceutical ETF (PPH) tracks MVIS US Listed Pharmaceutical 25 Index. Invesco Pharmaceuticals ETF has $404.06 million in assets, VanEck Pharmaceutical ETF has $1.26 billion. PJP has an expense ratio of 0.57%, and PPH charges 0.36%.

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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This article originally published on Zacks Investment Research (zacks.com).

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