A smart beta exchange traded fund, the Invesco Dynamic Biotechnology & Genome ETF (
PBE Quick Quote PBE - Free Report) debuted on 06/23/2005, and offers broad exposure to the Health Care ETFs category of the market. What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $214.10 million, this makes it one of the average sized ETFs in the Health Care ETFs. PBE is managed by Invesco. Before fees and expenses, this particular fund seeks to match the performance of the Dynamic Biotechnology & Genome Intellidex Index.
The Dynamic Biotech & Genome Intellidex Index seeks to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value.
Cost & Other Expenses
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 0.59%, making it on par with most peer products in the space.
PBE's 12-month trailing dividend yield is 0%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For PBE, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Taking into account individual holdings, Amgen Inc (
AMGN Quick Quote AMGN - Free Report) accounts for about 5.33% of the fund's total assets, followed by Bio-Techne Corp ( TECH Quick Quote TECH - Free Report) and Vertex Pharmaceuticals Inc ( VRTX Quick Quote VRTX - Free Report) .
The top 10 holdings account for about 47.92% of total assets under management.
Performance and Risk
The ETF has lost about -20.72% and is down about -21.58% so far this year and in the past one year (as of 05/24/2022), respectively. PBE has traded between $52.22 and $79.80 during this last 52-week period.
The fund has a beta of 1 and standard deviation of 29.19% for the trailing three-year period, which makes PBE a high risk choice in this particular space. With about 32 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Biotechnology & Genome ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
SPDR S&P Biotech ETF (
XBI Quick Quote XBI - Free Report) tracks S&P Biotechnology Select Industry Index and the iShares Biotechnology ETF ( IBB Quick Quote IBB - Free Report) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $5.48 billion in assets, iShares Biotechnology ETF has $7.59 billion. XBI has an expense ratio of 0.35% and IBB charges 0.45%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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.