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Should You Invest in the VanEck Biotech ETF (BBH)?

Sector ETF report for BBH

By
This story originally appeared on Zacks

If you're interested in broad exposure to the Healthcare - Biotech segment of the equity market, look no further than the VanEck Biotech ETF (BBH), a passively managed exchange traded fund launched on 12/20/2011.

- Zacks

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.

Investor-friendly, sector ETFs provide many options 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 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $559.06 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. BBH seeks to match the performance of the MVIS US Listed Biotech 25 Index before fees and expenses.

The MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.32%.

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.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Amgen Inc (AMGN) accounts for about 8.79% of total assets, followed by Moderna Inc (MRNA) and Illumina Inc (ILMN).

The top 10 holdings account for about 54.32% of total assets under management.

Performance and Risk

The ETF has added about 13.16% and is up about 17.01% so far this year and in the past one year (as of 11/08/2021), respectively. BBH has traded between $156.29 and $220.75 during this last 52-week period.

The ETF has a beta of 0.84 and standard deviation of 25% for the trailing three-year period, making it a high risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.

Alternatives

VanEck Biotech 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, BBH 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.

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 $7.60 billion in assets, iShares Biotechnology ETF has $10.03 billion. XBI has an expense ratio of 0.35% and IBB charges 0.45%.

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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VanEck Biotech ETF (BBH): ETF Research Reports

 

Amgen Inc. (AMGN): Free Stock Analysis Report

 

Illumina, Inc. (ILMN): 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

 

To read this article on Zacks.com click here.

 

Zacks Investment Research