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Should You Invest in the SPDR S&P Biotech ETF (XBI)?
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Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the SPDR S&P Biotech ETF (XBI - Free Report) is a passively managed exchange traded fund launched on 01/31/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $7.22 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. XBI seeks to match the performance of the S&P Biotechnology Select Industry Index before fees and expenses.
The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
Sector Exposure and Top Holdings
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, Global Blood Therapeutics Inc accounts for about 2.65% of total assets, followed by Karuna Therapeutics Inc. and Chemocentryx Inc. .
The top 10 holdings account for about 16.78% of total assets under management.
Performance and Risk
The ETF has lost about -30.73% so far this year and is down about -39.97% in the last one year (as of 11/07/2022). In that past 52-week period, it has traded between $62.81 and $130.51.
The ETF has a beta of 1.01 and standard deviation of 39.46% for the trailing three-year period, making it a high risk choice in the space. With about 135 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Biotech ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XBI is an outstanding option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NYSE Arca Biotechnology ETF (FBT - Free Report) tracks NYSE Arca Biotechnology Index and the iShares Biotechnology ETF (IBB - Free Report) tracks Nasdaq Biotechnology Index. First Trust NYSE Arca Biotechnology ETF has $1.35 billion in assets, iShares Biotechnology ETF has $8.10 billion. FBT has an expense ratio of 0.55% and IBB charges 0.44%.
Bottom Line
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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Should You Invest in the SPDR S&P Biotech ETF (XBI)?
Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the SPDR S&P Biotech ETF (XBI - Free Report) is a passively managed exchange traded fund launched on 01/31/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $7.22 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. XBI seeks to match the performance of the S&P Biotechnology Select Industry Index before fees and expenses.
The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
Sector Exposure and Top Holdings
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, Global Blood Therapeutics Inc accounts for about 2.65% of total assets, followed by Karuna Therapeutics Inc. and Chemocentryx Inc. .
The top 10 holdings account for about 16.78% of total assets under management.
Performance and Risk
The ETF has lost about -30.73% so far this year and is down about -39.97% in the last one year (as of 11/07/2022). In that past 52-week period, it has traded between $62.81 and $130.51.
The ETF has a beta of 1.01 and standard deviation of 39.46% for the trailing three-year period, making it a high risk choice in the space. With about 135 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Biotech ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XBI is an outstanding option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NYSE Arca Biotechnology ETF (FBT - Free Report) tracks NYSE Arca Biotechnology Index and the iShares Biotechnology ETF (IBB - Free Report) tracks Nasdaq Biotechnology Index. First Trust NYSE Arca Biotechnology ETF has $1.35 billion in assets, iShares Biotechnology ETF has $8.10 billion. FBT has an expense ratio of 0.55% and IBB charges 0.44%.
Bottom Line
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.