The Vivus ETF Effect

February 24, 2012

The SPDR S&P Pharmaceuticals ETF (NYSEArca: XPH) and the PowerShares Dynamic Pharmaceuticals Portfolio (NYSEArca: PJP) nearly doubled their 2012 returns on Thursday, after an obesity drug from the biotech firm Vivus won approval from federal regulators, according to an article in Barron's.

Vivus jumped 88 percent to $19.80 a share on the news, and while XPH and PJP only have 2.4 and 2.7 percent weightings of Vivus, they moved up 3.7 and 3.1 percent, respectively according to the Barron's article.

The report said the funds’ gains serve as a reminder of why investors favor ETFs in that they can participate in an upside pop in a particular company's share price while still diversifying away single-company risk.

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