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Is iShares Biotechnology ETF (IBB) a Strong ETF Right Now?
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The iShares Biotechnology ETF (IBB - Free Report) was launched on 02/05/2001, and is a smart beta exchange traded fund designed to offer broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $7.17 billion, this makes it one of the largest ETFs in the Health Care ETFs. IBB is managed by Blackrock. Before fees and expenses, IBB seeks to match the performance of the Nasdaq Biotechnology Index.
The ICE Biotechnology Index contains securities of NASDAQ listed companies that are classified as either biotechnology or pharmaceuticals.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.45% for IBB, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.30%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 99.90% of the portfolio.
Taking into account individual holdings, Gilead Sciences Inc (GILD - Free Report) accounts for about 8.31% of the fund's total assets, followed by Regeneron Pharmaceuticals Inc (REGN - Free Report) and Amgen Inc (AMGN - Free Report) .
IBB's top 10 holdings account for about 50.26% of its total assets under management.
Performance and Risk
Year-to-date, the iShares Biotechnology ETF has lost about -0.18% so far, and is up about 5.36% over the last 12 months (as of 06/05/2024). IBB has traded between $112.41 and $140.89 in this past 52-week period.
The fund has a beta of 0.75 and standard deviation of 22.20% for the trailing three-year period, which makes IBB a high risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Biotechnology ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which 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 $1.13 billion in assets, SPDR S&P Biotech ETF has $6.92 billion. FBT has an expense ratio of 0.56% and XBI charges 0.35%.
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.
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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Is iShares Biotechnology ETF (IBB) a Strong ETF Right Now?
The iShares Biotechnology ETF (IBB - Free Report) was launched on 02/05/2001, and is a smart beta exchange traded fund designed to offer broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $7.17 billion, this makes it one of the largest ETFs in the Health Care ETFs. IBB is managed by Blackrock. Before fees and expenses, IBB seeks to match the performance of the Nasdaq Biotechnology Index.
The ICE Biotechnology Index contains securities of NASDAQ listed companies that are classified as either biotechnology or pharmaceuticals.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.45% for IBB, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.30%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 99.90% of the portfolio.
Taking into account individual holdings, Gilead Sciences Inc (GILD - Free Report) accounts for about 8.31% of the fund's total assets, followed by Regeneron Pharmaceuticals Inc (REGN - Free Report) and Amgen Inc (AMGN - Free Report) .
IBB's top 10 holdings account for about 50.26% of its total assets under management.
Performance and Risk
Year-to-date, the iShares Biotechnology ETF has lost about -0.18% so far, and is up about 5.36% over the last 12 months (as of 06/05/2024). IBB has traded between $112.41 and $140.89 in this past 52-week period.
The fund has a beta of 0.75 and standard deviation of 22.20% for the trailing three-year period, which makes IBB a high risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Biotechnology ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which 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 $1.13 billion in assets, SPDR S&P Biotech ETF has $6.92 billion. FBT has an expense ratio of 0.56% and XBI charges 0.35%.
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.
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.