Looking for broad exposure to the Healthcare - Biotech segment of the equity market? You should consider the Invesco Dynamic Biotechnology & Genome ETF (
PBE Quick Quote PBE - Free Report) , a passively managed exchange traded fund launched on 06/23/2005.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 3, placing it in top 19%.
The fund is sponsored by Invesco. It has amassed assets over $222.65 M, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. PBE seeks to match the performance of the Dynamic Biotechnology & Genome Intellidex Index before fees and expenses.
This is comprised of stocks of 30 U.S. biotechnology and genome companies. These are companies that are principally engaged in the research, development, manufacture and marketing and distribution of various biotechnological products, services and processes and companies that benefit significantly from scientific and technological advances in biotechnology and genetic engineering and research.
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 0.57%, making it on par with most peer products in the space.
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 100% of the portfolio.
Looking at individual holdings, Eli Lilly & Co (LLY) accounts for about 5.84% of total assets, followed by Bristol-Myers Squibb Co (BMY) and Johnson & Johnson (JNJ).
The top 10 holdings account for about 47.05% of total assets under management.
Performance and Risk
The ETF has lost about -3.90% so far this year and is down about -2.25% in the last one year (as of 02/27/2020). In that past 52-week period, it has traded between $46.42 and $57.41.
The ETF has a beta of 1.51 and standard deviation of 22.23% for the trailing three-year period, making it a high risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Biotechnology & Genome 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, PBE is a good 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 Nasdaq Biotechnology ETF ( IBB Quick Quote IBB - Free Report) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $4.05 B in assets, iShares Nasdaq Biotechnology ETF has $7.24 B. XBI has an expense ratio of 0.35% and IBB charges 0.47%. Bottom Line
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Zacks ETF Center.