Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the VanEck Biotech ETF (
BBH Quick Quote BBH - Free Report) is a passively managed exchange traded fund launched on 12/20/2011.
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.
Investor-friendly, sector ETFs provide many options 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 6, placing it in top 38%.
The fund is sponsored by Van Eck. It has amassed assets over $436.65 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. BBH seeks to match the performance of the MVIS US Listed Biotech 25 Index before fees and expenses.
The MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.27%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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, Amgen Inc (
AMGN Quick Quote AMGN - Free Report) accounts for about 13.69% of total assets, followed by Gilead Sciences Inc ( GILD Quick Quote GILD - Free Report) and Vertex Pharmaceuticals Inc ( VRTX Quick Quote VRTX - Free Report) .
The top 10 holdings account for about 64.63% of total assets under management.
Performance and Risk
The ETF has lost about -21.15% so far this year and is down about -31.97% in the last one year (as of 09/19/2022). In that past 52-week period, it has traded between $132.48 and $218.61.
The ETF has a beta of 0.83 and standard deviation of 27.15% for the trailing three-year period, making it a high risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.
VanEck Biotech 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, BBH 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.
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 $7.53 billion in assets, iShares Biotechnology ETF has $7.92 billion. XBI has an expense ratio of 0.35% and IBB charges 0.44%. Bottom Line
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