Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some pharmaceutical stocks to your portfolio but don't have the time or expertise to hand-pick a few, the Market Vectors Pharmaceutical ETF (NYSEMKT:PPH) could save you a lot of trouble. Instead of trying to figure out which pharmaceutical stocks will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. This ETF, focused on pharmaceutical stocks, sports a relatively low expense ratio -- an annual fee -- of 0.35%. The fund is on the small side, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This pharmaceutical-stocks ETF is too young to offer a sufficient track record to assess, but it's off to a good start, topping the world market over the past year. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why pharmaceutical stocks?
A simple answer: demographics. As our global population grows and ages, and lives longer, the demand for health care products and services seems quite likely to grow, serving pharmaceutical stocks well. In addition, as developing nations develop, their populations will have more money to spend on health care.

More than a handful of pharmaceutical stocks had strong performances over the past year. Bristol-Myers Squibb (NYSE:BMY) surged 66%, and yields 2.7%. The company posted revenue up 9% in its last quarter (over year-ago levels), and topped analyst expectations. Its skin-cancer drug Yervoy has been performing well, and it recently reported promising results for its anti-PD-1 inhibitor nivolumab, that treats non-small cell lung cancer and for an arthritis drug, too. Meanwhile, Morgan Stanley gave Bristol-Myers Squibb stock a big boost, upgrading it and hiking its price target by 33%. Still, bears worry about patent expirations (which plague every pharma company) and don't like that its newly approved blood thinner, Eliquis, isn't selling too briskly.

AbbVie (NYSE:ABBV), split off from Abbott Laboratories, is trading near a 52-week high, up some 45% above its 52-week low. AbbVie offers investors a lot of good news and bad in its blockbuster rheumatoid arthritis drug, Humira. On the one hand, its sales are growing, generating about $11 billion annually, but its patent protection is due to expire in 2016. AbbVie's third-quarter report was solid, with several drugs experiencing double-digit sales gains, and a few moving in the opposite direction just as rapidly. Its pipeline is quite promising, especially in its efforts to combat hepatitis-C, and its stock yields 3.3%.

Other pharmaceutical stocks didn't do quite as well over the last year. Teva Pharmaceutical Industries (NYSE:TEVA), for example, shed 8%, and it yields 3%. Teva Pharmaceutical has some worried about the impending patent-protection expiration of its multiple sclerosis drug, Copaxone. Bulls would remind you, though, that it's still a major player in generic drugs, with more than 140 product registrations awaiting FDA approval. Its third quarter delivered revenue growth of 2%, and U.S. generic sales up 6%, but that got a bit overshadowed by news that its CEO is departing.

Eli Lilly (NYSE:LLY) gained just 7%, but it's yielding 3.7%. Its advanced-gastric-cancer drug ramucirumab has received priority review from the FDA, and the company also reported positive results from a late-stage study of lung cancer drug necitumumab. The big concern regarding Eli Lilly is the patent expiration next month of its blockbuster antidepressant drug, Cymbalta, which has generated more than $4 billion in revenue this year – so far. Still, Lilly has plenty of drugs in its pipeline, tackling diabetes, cancer, Alzheimer's disease, and more.


The big picture

If you're interested in adding some pharmaceutical stocks

to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Longtime Fool contributor Selena Maranjianwhom you can follow on Twitter, owns no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.