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Designed to provide broad exposure to the Health Care ETFs category of the market, the Invesco Dynamic Biotechnology & Genome ETF (PBE) is a smart beta exchange traded fund launched on 06/23/2005.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PBE has amassed assets over $281.96 million, making it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, PBE seeks to match the performance of the Dynamic Biotechnology & Genome Intellidex Index.
This is comprised of stocks of 30 U.S. biotechnology and genome companies. These are companies that are principally engaged in the research, development, manufacture and marketing and distribution of various biotechnological products, services and processes and companies that benefit significantly from scientific and technological advances in biotechnology and genetic engineering and research.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.59%.
It has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For PBE, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Taking into account individual holdings, Catalent Inc (CTLT) accounts for about 5.59% of the fund's total assets, followed by Repligen Corp (RGEN) and Bio-Techne Corp (TECH).
PBE's top 10 holdings account for about 45.98% of its total assets under management.
Performance and Risk
The ETF has added about 2.47% so far this year and it's up approximately 15.52% in the last one year (as of 11/17/2021). In the past 52-week period, it has traded between $61.28 and $83.81.
The ETF has a beta of 0.98 and standard deviation of 28.64% 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.
Invesco Dynamic Biotechnology & Genome ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $9.91 billion. XBI has an expense ratio of 0.35% and IBB charges 0.45%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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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Invesco Dynamic Biotechnology & Genome ETF (PBE): ETF Research Reports
iShares Biotechnology ETF (IBB): ETF Research Reports
Repligen Corporation (RGEN) : Free Stock Analysis Report
BioTechne Corp (TECH) : Free Stock Analysis Report
Catalent, Inc. (CTLT) : Free Stock Analysis Report
SPDR S&P Biotech ETF (XBI): ETF Research Reports
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