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Should You Invest in the iShares Biotechnology ETF (IBB)?
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Launched on 02/05/2001, the iShares Biotechnology ETF (IBB - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Biotech segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $7.56 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 ICE Biotechnology Index contains securities of NASDAQ listed companies that are classified as either biotechnology or pharmaceuticals.
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 0.44%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.25%.
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 99.80% of the portfolio.
Looking at individual holdings, Amgen Inc (AMGN - Free Report) accounts for about 8.27% of total assets, followed by Gilead Sciences Inc (GILD - Free Report) and Regeneron Pharmaceuticals Inc (REGN - Free Report) .
The top 10 holdings account for about 54.37% of total assets under management.
Performance and Risk
Year-to-date, the iShares Biotechnology ETF has lost about -1.14% so far, and is up roughly 7.91% over the last 12 months (as of 07/19/2023). IBB has traded between $113.42 and $138.43 in this past 52-week period.
The ETF has a beta of 0.82 and standard deviation of 24.14% for the trailing three-year period, making it a high risk choice in the space. With about 276 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Biotechnology ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IBB is an excellent 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 SPDR S&P Biotech ETF (XBI - Free Report) tracks S&P Biotechnology Select Industry Index. First Trust NYSE Arca Biotechnology ETF has $1.43 billion in assets, SPDR S&P Biotech ETF has $6.48 billion. FBT has an expense ratio of 0.56% and XBI charges 0.35%.
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 iShares Biotechnology ETF (IBB)?
Launched on 02/05/2001, the iShares Biotechnology ETF (IBB - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Biotech segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $7.56 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 ICE Biotechnology Index contains securities of NASDAQ listed companies that are classified as either biotechnology or pharmaceuticals.
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 0.44%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.25%.
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 99.80% of the portfolio.
Looking at individual holdings, Amgen Inc (AMGN - Free Report) accounts for about 8.27% of total assets, followed by Gilead Sciences Inc (GILD - Free Report) and Regeneron Pharmaceuticals Inc (REGN - Free Report) .
The top 10 holdings account for about 54.37% of total assets under management.
Performance and Risk
Year-to-date, the iShares Biotechnology ETF has lost about -1.14% so far, and is up roughly 7.91% over the last 12 months (as of 07/19/2023). IBB has traded between $113.42 and $138.43 in this past 52-week period.
The ETF has a beta of 0.82 and standard deviation of 24.14% for the trailing three-year period, making it a high risk choice in the space. With about 276 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Biotechnology ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IBB is an excellent 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 SPDR S&P Biotech ETF (XBI - Free Report) tracks S&P Biotechnology Select Industry Index. First Trust NYSE Arca Biotechnology ETF has $1.43 billion in assets, SPDR S&P Biotech ETF has $6.48 billion. FBT has an expense ratio of 0.56% and XBI charges 0.35%.
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.