If you're interested in broad exposure to the Healthcare - Biotech segment of the equity market, look no further than the Invesco Dynamic Biotechnology & Genome ETF (PBE), 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.
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 3, placing it in top 19%.
The fund is sponsored by Invesco. It has amassed assets over $282.53 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.
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 one of the more expensive products in the space.
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, Regeneron Pharmaceuticals Inc (REGN) accounts for about 5.81% of total assets, followed by Qiagen Nv (QGEN) and Vertex Pharmaceuticals Inc (VRTX).
The top 10 holdings account for about 48.80% of total assets under management.
Performance and Risk
So far this year, PBE has added about 11.15%, and is up roughly 0.87% in the last one year (as of 02/20/2019). During this past 52-week period, the fund has traded between $43.44 and $60.27.
The ETF has a beta of 1.56 and standard deviation of 25.38% 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 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, PBE 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.
SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index and the iShares Nasdaq Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $4.06 B in assets, iShares Nasdaq Biotechnology ETF has $8.25 B. XBI has an expense ratio of 0.35% and IBB charges 0.47%.
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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Invesco Dynamic Biotechnology & Genome ETF (PBE): ETF Research Reports
iShares Nasdaq Biotechnology ETF (IBB): ETF Research Reports
SPDR S&P Biotech ETF (XBI): ETF Research Reports
Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report
QIAGEN N.V. (QGEN): Free Stock Analysis Report
Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.