Invesco Pharmaceuticals ETF vs. iShares Biotechnology ETF: Which Is the Better Buy?
Key Points
PJP targets companies in the pharmaceuticals sector, while IBB targets biotech stocks.
IBB has a lower expense ratio, making it more affordable on fees, while PJP offers a higher dividend yield.
PJP has demonstrated lower historical volatility, but it's also underperformed IBB over the last 12 months.
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Both the Invesco Pharmaceuticals ETF (NYSEMKT:PJP) and the iShares Biotechnology ETF (NASDAQ:IBB)target specific niches of the healthcare sector, but their distinct approaches could appeal to different investors.
While IBB casts a wide net across hundreds of biotech companies, PJP focuses on a tight group of 30 pharmaceutical companies involved in drug development and distribution. Here's how the two stack up on risk, reward, and other factors that might influence your decision between the two.
Snapshot (cost & size)
| Metric | IBB | PJP |
|---|---|---|
| Issuer | iShares | Invesco |
| Share price (as of Oct. 22, 2026) | $209.54 | $127.31 |
| Expense ratio | 0.44% | 0.58% |
| 1-yr return (as of Oct. 22, 2026) | 37.7% | 33.9% |
| Dividend yield | 0.16% | 0.92% |
| Beta (5Y monthly) | 0.70 | 0.42 |
| Assets under management (AUM) | $11.2 billion | $557.2 million |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
IBB is more affordable with a lower expense ratio, helping investors save money on fees. However, PJP provides a higher payout, offering more passive dividend income potential.
Performance & risk comparison
| Metric | IBB | PJP |
|---|---|---|
| Max drawdown (5 yr) | (39.8%) | (17.5%) |
| Growth of $1,000 over 5 years (total return) | $1,352 | $1,685 |
What's inside
PJP is entirely dedicated to the healthcare sector, focusing on companies that research and manufacture pharmaceutical drugs. The fund holds 27 stocks, and its largest positions include Gilead Sciences, Pfizer, and AbbVie. The fund was launched in 2005 and has paid $1.13 per share in dividends over the trailing 12 months.
IBB is also 100% focused on the healthcare sector, but provides a much broader reach with 243 biotechnology stocks. Its largest positions include Gilead Sciences, Vertex Pharmaceuticals, and Amgen. The fund was launched in 2001 and has paid $0.34 per share in dividends over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
IBB and PJP track different corners of the healthcare sector, and the right fit for you will depend mostly on the gaps you're looking to fill within your portfolio. IBB focuses on biotechnology stocks while PJP targets pharmaceutical companies, and each can help build a well-diversified portfolio.
In terms of risk, reward, and costs, the two differ in a few ways. PJP is more expensive to own, with an expense ratio of 0.58% compared to IBB's 0.44%. In other words, investors can expect to pay $58 per year in fees for every $10,000 invested in PJP compared to $44 per year for every $10,000 in IBB.
IBB has experienced more severe volatility, however. It experienced its nearly 40% max drawdown throughout the 2022 bear market, and it was hit much harder during that downturn than PJP. IBB's higher beta also suggests that it is more vulnerable to short-term price fluctuations.
With biotech stocks surging in 2026, IBB has outperformed PJP over the past year. That said, rising interest rates and bond yields could potentially hurt some cash-strapped companies.
PJP has been the more stable of the two ETFs in terms of price fluctuations, and it's also outperformed IBB over the past five years. While its returns haven't been quite as strong this year, its smaller max drawdown and lower beta could appeal to investors seeking more consistency.
While both ETFs can be smart buys, ultimately, the right choice for you will depend on your goals and risk tolerance.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Amgen, Gilead Sciences, Pfizer, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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