Should You Invest in the ALPS Medical Breakthroughs ETF (SBIO)?
Sector ETF report for SBIO
Designed to provide broad exposure to the Healthcare - Broad segment of the equity market, the ALPS Medical Breakthroughs ETF (SBIO) is a passively managed exchange traded fund launched on 12/31/2014.
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.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.
The fund is sponsored by Alps. It has amassed assets over $214.03 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. SBIO seeks to match the performance of the Poliwogg Medical Breakthroughs Index before fees and expenses.
The Poliwogg Medical Breakthroughs Index captures research & development opportunities in the pharmaceutical industry. It consists of small-cap and mid-cap pharmaceutical and biotechnology stocks listed on US stock exchanges that have one or more drugs in either Phase II or Phase III US FDA clinical trials.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.50%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Tgtxtg Therapeutics Inc. Accounts for about 3.22% of total assets, followed by Legnlegend Biotech Corp. And Aplsapellis Pharmaceuticals Inc.
The top 10 holdings account for about 26.24% of total assets under management.
Performance and Risk
So far this year, SBIO has lost about -8.59%, and is up roughly 15.21% in the last one year (as of 09/22/2021). During this past 52-week period, the fund has traded between $39.70 and $63.63.
The ETF has a beta of 1.17 and standard deviation of 36.15% for the trailing three-year period, making it a high risk choice in the space. With about 128 holdings, it effectively diversifies company-specific risk.
ALPS Medical Breakthroughs 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, SBIO 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.
Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.51 billion in assets, Health Care Select Sector SPDR ETF has $32.71 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.
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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ALPS Medical Breakthroughs ETF (SBIO): ETF Research Reports
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF Research Reports
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