Should You Invest in the First Trust NYSE Arca Biotechnology ETF (FBT)?
Sector ETF report for FBT
If you're interested in broad exposure to the Healthcare - Biotech segment of the equity market, look no further than the First Trust NYSE Arca Biotechnology ETF (FBT), a passively managed exchange traded fund launched on 06/19/2006.
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.
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 9, placing it in bottom 44%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.82 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. FBT seeks to match the performance of the NYSE Arca Biotechnology Index before fees and expenses.
The NYSE Arca Biotechnology Index is an equal dollar weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services.
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 0.55%, making it on par with most peer 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, Biontech Se (adr) (BNTX) accounts for about 3.57% of total assets, followed by Moderna, Inc. (MRNA) and Charles River Laboratories International, Inc. (CRL).
The top 10 holdings account for about 34.33% of total assets under management.
Performance and Risk
The ETF has gained about 0.06% so far this year and is up roughly 9.89% in the last one year (as of 11/03/2021). In that past 52-week period, it has traded between $156.06 and $184.84.
The ETF has a beta of 0.90 and standard deviation of 25.87% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
First Trust NYSE Arca Biotechnology 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, FBT is a reasonable 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) tracks S&P Biotechnology Select Industry Index and the iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $7.48 billion in assets, iShares Biotechnology ETF has $10.49 billion. XBI has an expense ratio of 0.35% and IBB charges 0.45%.
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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First Trust NYSE Arca Biotechnology ETF (FBT): ETF Research Reports
Charles River Laboratories International, Inc. (CRL): Free Stock Analysis Report
Moderna, Inc. (MRNA): Free Stock Analysis Report
iShares Biotechnology ETF (IBB): ETF Research Reports
SPDR S&P Biotech ETF (XBI): ETF Research Reports
BioNTech SE Sponsored ADR (BNTX): Free Stock Analysis Report
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