Should You Invest in the VanEck Biotech ETF (BBH)?
Sector ETF report for BBH
Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the VanEck Biotech ETF (BBH) is a passively managed exchange traded fund launched on 12/20/2011.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 - 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 Van Eck. It has amassed assets over $518.06 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.
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 least expensive products in the space.
It has a 12-month trailing dividend yield of 0.23%.
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 8.67% of total assets, followed by Moderna Inc (MRNA) and Vertex Pharmaceuticals Inc (VRTX).
The top 10 holdings account for about 58.11% of total assets under management.
Performance and Risk
So far this year, BBH has lost about -6.47%, and is down about -0.50% in the last one year (as of 01/10/2022). During this past 52-week period, the fund has traded between $167.43 and $220.75.
The ETF has a beta of 0.82 and standard deviation of 24.70% 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.
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 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.
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 $6.33 billion in assets, iShares Biotechnology ETF has $9.18 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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VanEck Biotech ETF (BBH): ETF Research Reports
Amgen Inc. (AMGN): Free Stock Analysis Report
Vertex Pharmaceuticals Incorporated (VRTX): 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
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