Share-split context: A forward split was recorded on Mar 7, 2024 with coefficient 3. A forward split turns each old share into multiple new shares and lowers the quoted price per share proportionally. Proportional ownership is unchanged at the split moment, so the split itself creates neither a gain nor a loss. The price-return figures in this report are already split-adjusted.

Understanding the iShares U.S. Pharmaceuticals ETF (IHE)

The iShares U.S. Pharmaceuticals ETF (ticker: IHE) is designed to track the performance of companies in the U.S. pharmaceutical industry. This ETF provides exposure to various drug makers and healthcare companies.

What this ETF is trying to do

IHE focuses on the pharmaceutical sector. It holds a variety of companies that develop and sell medicines. By owning this ETF, an investor is essentially buying a small piece of many different pharmaceutical businesses at once.

Top Holdings

The following are the largest companies held by this ETF (note that this is a partial list):

• Eli Lilly and Co (23.51%)

• Johnson & Johnson (22.64%)

• Pfizer Inc (4.69%)

• Viatris Inc (4.55%)

• Merck & Co Inc (4.50%)

• Bristol-Myers Squibb Co (4.43%)

• Royalty Pharma PLC Class A (4.40%)

• Zoetis Inc Class A (4.35%)

• Jazz Pharmaceuticals PLC (3.36%)

• Elanco Animal Health Inc (2.50%)

*Holdings can change over time.*

What the numbers show

When looking at how this ETF has performed, it is important to distinguish between price return (the change in the share price) and total return (which includes the value of distributions).

• Year-to-Date (YTD): The price return is approximately 17.16%, while the total return is approximately 18.23%.

• One-Year: The price return was approximately 32.17%, and the total return was approximately 34.30%.

• Three-Year: The price return was approximately 67.53%, and the total return was approximately 75.80%.

This ETF has a history of forward splits. In a forward split, each old share becomes multiple new shares. This causes the per-share price to fall proportionally, but it does not change how much of the fund you own.

Income and distribution explanation

IHE provides cash distributions to investors. The current distribution yield is approximately 1.44%. This means the amount of cash paid out is about 1.44% of the current share price.

The ETF usually pays distributions on a quarterly basis. Over the last 12 months, there were 4 payments. The trailing distributions totaled approximately $1.43 per share.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the fund's underlying assets). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, regarding price erosion (the decline in the market price of the shares), the data shows an erosion score of 100, which is labeled as "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag.

Pros

• Strong Price Growth: The ETF has shown significant positive price returns over the one-year and three-year periods.

• Total Returns: The total returns are higher than the price returns, showing that distributions have added value to the overall performance.

Cons

• Sector Concentration: Because this ETF focuses only on pharmaceuticals, it may be more sensitive to changes in that specific industry compared to a more diversified fund.

Beginner takeaway

IHE is an ETF that tracks pharmaceutical companies. It has recently shown strong growth in both its share price and its total return. While it pays a modest distribution, the primary driver of its recent performance has been the increase in share price.