This has been, quite simply a very, very good year in which to be long health care exchange traded funds.
The Health Care Select Sector SPDR (XLV) is battling with its discretionary rival to be the best of the nine SPDR ETFs for 2013 and XLV spent some time as the third-largest sector SPDR by assets. [XLV Moves Into Third Spot Among SPDRs]
So strong have health care ETFs been that three rank among the ten best non-leveraged ETFs on the year. All three are biotechnology funds and each has a shot of wearing the crown as 2013’s top health care ETF, though the Market Vectors Biotech ETF (BBH) , up 63.2%, and the iShares Nasdaq Biotechnology ETF (IBB) , up 63.1%, have the inside track over the PowerShares Dynamic Biotechnology & Genome Portfolio (PBE) and its 2013 gain of 60.8%. [ETFs for Upstart Health Care Companies]
The success enjoyed by BBH and IBB this year is heavily tied to biotech’s “Big Four,” a quartet comprised of Amgen (AMGN), Biogen (BIIB), Celegene (CELG) and Gilead (GILD). Those stocks combine for 34.2% of IBB’s weight and roughly 43% of BBH’s weight.
The $4.3 billion IBB, the largest biotech ETF by assets, is home to 119 stocks compared to 26 in BBH. However, the Market Vectors offering has a lower annual expense ratio at 0.35% compared to 0.48% on IBB. BBH’s weighted average market value is just over $43 billion compared to an average market cap of $30.2 billion in IBB, according to issuer data.
BBH and IBB share another trait in common. Both were also among 2012’s top-10 sector ETFs and are the only two funds from last year’s list to make a return appearance in 2013. [Some of 2012's Best Sector ETFs Kept Soaring in 2013]
In a sign of just how strong the biotech sub-sector has been in recent years, IBB has been one of the 10 best sector ETFs in each of the past three years. Last year’s top-10 list included four biotech ETFs.
Market Vectors Biotech ETF
ETF Trends editorial team contributed to this post.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
- Health Care Industry