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

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Pharma is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.

The fund is sponsored by Blackrock. It has amassed assets over $1.63 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Pharma segment of the equity market. IHE 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.

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.37%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.44%.

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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.

Looking at individual holdings, Johnson & Johnson (JNJ) accounts for about 22.21% of total assets, followed by Eli Lilly (LLY) and Bristol Myers Squibb (BMY).

The top 10 holdings account for about 75.12% of total assets under management.

The ETF return is roughly 20.69% so far this year and is up roughly 45.67% in the last one year (as of 09/15/2026). In that past 52-week period, it has traded between $69.09 and $108.16.

The ETF has a beta of 0.49 and standard deviation of 16.8% for the trailing three-year period, making it a high risk choice in the space. With about 60 holdings, it effectively diversifies company-specific risk.

iShares U.S. Pharmaceuticals ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IHE is a good option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

VanEck Pharmaceutical ETF (PPH) tracks MVIS US Listed Pharmaceutical 25 Index and the First Trust NASDAQ Pharmaceuticals ETF (FTXH) tracks Nasdaq US Smart Pharmaceuticals Index. VanEck Pharmaceutical ETF has $1.01 billion in assets, First Trust NASDAQ Pharmaceuticals ETF has $1.05 billion. PPH has an expense ratio of 0.36%, and FTXH charges 0.6%.

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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iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports

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