California-based Gilead Sciences (GILD) was in focus last week as it saw some encouraging clinical trial data on its HIV pill—TAF. This report pushed up GILD by about 4.5% last week and helped many biotech ETFs surge in the time frame as well.
This has obviously been particularly true for those funds that have major holdings in GILD. In fact, these ETFs clearly outpaced the broader market funds like SPDR S&P 500 ETF (SPY) and Dow Jones Industrial Average ETF (DIA) by a wide margin over the trailing one-week period.
The SPDR S&P Biotech ETF (XBI) led the sector with 5.39% gain followed by iShares NASDAQ Biotechnology Fund (IBB), which added 4.07% in the past five day period. Being the most popular funds, these products saw a good weekly volume of 1.8 million and 2.5 million shares, respectively (read: Biotech ETFs: A Fiscal Cliff Safe Haven?).
XBI tracks the S&P Biotechnology Select Industry Index, holding 51 stocks while IBB tracks the NASDAQ Biotechnology index, holding 120 securities. The former focuses on small cap companies while the latter centers on large caps. State Street product charges low fee of just 35 bps a year while the iShares product charges 48 bps a year.
The top three holdings of XBI consist of Isis Pharmaceuticals (ISIS), Pharmacyclics (PCYC) and Incyte (INCY) all of which account for less than 4.1% of assets. Meanwhile, top stocks in IBB include Regeneron Pharma (REGN), GILD and Amgen (AMGN), all of which make up at least 8% of assets.
Another strong performer on the week was the Market Vectors Biotech ETF (BBH), which gained 4.01% in the same timeframe by tracking the Market Vectors US Listed Biotech 25 Index. It has amassed over $197 million in AUM and 194,000 shares in weekly volume.
The fund holds 26 securities in its basket and charges a low annual fee of 35 bps. This is also the large cap centric fund and is somewhat concentrated from an individual security perspective with AMGN and GILD combining to take up about 25% of assets (see more ETFs in the Zacks ETF Center).
First Trust NYSE Arca Biotechnology Index Fund (FBT) added 3.72% in the same time frame. The fund tracks the Amex biotechnology Index, utilizing an equal weight technique for its approach. The fund is expensive at 60 basis points a year while weekly volume and total AUM are respectable at 352,000 shares a day and $275 million, respectively.
With 20 stocks in its basket, the fund has a nice mix of all cap securities with top three holdings include INCY, Biogen Idec (BIIB) and United Therapeutics (UTHR), each of which make up, on average, 6% of the fund (read: Top Ranked Biotech ETF: FBT).
PowerShares Dynamic Biotech & Genome (PBE), the least popular in the space, gained 2.95% in the past five trading session. The fund follows the Dynamic Biotechnology & Genome Intellidex Index, holding 30 stocks in the basket. Though it failed to attract investors with just 51,000 shares exchange hands, it has amassed over $140 million in AUM.
The ETF is tilted toward small cap securities. The top three holdings - REGN, AMGN and GILD – each make up for 5% of the assets on average. The fund costs 60 bps per year and could be a more volatile play on the biotech world.
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