Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the iShares Biotechnology ETF (
IBB Quick Quote IBB - Free Report) is a passively managed exchange traded fund launched on 02/05/2001.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
The fund is sponsored by Blackrock. It has amassed assets over $10.22 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. IBB seeks to match the performance of the Nasdaq Biotechnology Index before fees and expenses.
The NASDAQ Biotechnology Index contains securities of NASDAQ listed companies that are classified as either biotechnology or pharmaceuticals.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.45%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.22%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 99.80% of the portfolio.
Looking at individual holdings, Amgen Inc (
AMGN Quick Quote AMGN - Free Report) accounts for about 7.74% of total assets, followed by Gilead Sciences Inc ( GILD Quick Quote GILD - Free Report) and Moderna Inc ( MRNA Quick Quote MRNA - Free Report) .
The top 10 holdings account for about 46.17% of total assets under management.
Performance and Risk
The ETF has added roughly 6.53% so far this year and it's up approximately 18.71% in the last one year (as of 10/27/2021). In that past 52-week period, it has traded between $130.38 and $176.21.
The ETF has a beta of 0.93 and standard deviation of 26.15% for the trailing three-year period, making it a high risk choice in the space. With about 277 holdings, it effectively diversifies company-specific risk.
IShares Biotechnology 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, IBB is a great 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 Quick Quote FBT - Free Report) tracks NYSE Arca Biotechnology Index and the SPDR S&P Biotech ETF ( XBI Quick Quote XBI - Free Report) tracks S&P Biotechnology Select Industry Index. First Trust NYSE Arca Biotechnology ETF has $1.80 billion in assets, SPDR S&P Biotech ETF has $6.71 billion. FBT has an expense ratio of 0.55% and XBI charges 0.35%. Bottom Line
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Zacks ETF Center.