Designed to provide broad exposure to the Healthcare - Broad segment of the equity market, the ALPS Medical Breakthroughs ETF (
SBIO Quick Quote SBIO - Free Report) is a passively managed exchange traded fund launched on 12/31/2014.
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.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.
The fund is sponsored by Alps. It has amassed assets over $234.01 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. SBIO seeks to match the performance of the Poliwogg Medical Breakthroughs Index before fees and expenses.
The Poliwogg Medical Breakthroughs Index captures research & development opportunities in the pharmaceutical industry. It consists of small-cap and mid-cap pharmaceutical and biotechnology stocks listed on US stock exchanges that have one or more drugs in either Phase II or Phase III US FDA clinical trials.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.50%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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, Fate Therapeutics Inc. (
FATE Quick Quote FATE - Free Report) accounts for about 4.35% of total assets, followed by Vir Biotechnology Inc. ( VIR Quick Quote VIR - Free Report) and Emergent Biosolutions Inc. ( EBS Quick Quote EBS - Free Report) .
The top 10 holdings account for about 30.23% of total assets under management.
Performance and Risk
The ETF has lost about -6.23% and was up about 17.68% so far this year and in the past one year (as of 06/08/2021), respectively. SBIO has traded between $38.39 and $63.63 during this last 52-week period.
The ETF has a beta of 1.20 and standard deviation of 35.67% for the trailing three-year period, making it a high risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
ALPS Medical Breakthroughs ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SBIO is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Health Care ETF (
VHT Quick Quote VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF ( XLV Quick Quote XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $14.58 billion in assets, Health Care Select Sector SPDR ETF has $27.56 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%. Bottom Line
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Zacks ETF Center.