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Should You Invest in the ALPS Medical Breakthroughs ETF (SBIO)?

Sector ETF report for SBIO

By
This story originally appeared on Zacks

If you're interested in broad exposure to the Healthcare - Broad segment of the equity market, look no further than the ALPS Medical Breakthroughs ETF (SBIO), a passively managed exchange traded fund launched on 12/31/2014.

- Zacks

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by Alps. It has amassed assets over $207.88 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.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

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

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.

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

The ETF has lost about -10.81% and was up about 1.82% so far this year and in the past one year (as of 10/14/2021), respectively. SBIO has traded between $41.56 and $63.63 during this last 52-week period.

The ETF has a beta of 1.16 and standard deviation of 36% 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.

Alternatives

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 sufficient 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 $15.72 billion in assets, Health Care Select Sector SPDR ETF has $29.30 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.

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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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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