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Should You Invest in the Invesco Dynamic Biotechnology & Genome ETF (PBE)?

Zacks Equity Research

Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the Invesco Dynamic Biotechnology & Genome ETF (PBE) is a passively managed exchange traded fund launched on 06/23/2005.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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 2, placing it in top 13%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $283.94 M, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. PBE seeks to match the performance of the Dynamic Biotechnology & Genome Intellidex Index before fees and expenses.

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.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that 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, Alnylam Pharmaceuticals Inc (ALNY) accounts for about 5.51% of total assets, followed by Qiagen Nv (QGEN) and Regeneron Pharmaceuticals Inc (REGN).

The top 10 holdings account for about 46.31% of total assets under management.

Performance and Risk

So far this year, PBE has added about 18.31%, and is up roughly 8.68% in the last one year (as of 03/20/2019). During this past 52-week period, the fund has traded between $43.44 and $60.27.

The ETF has a beta of 1.55 and standard deviation of 25.27% for the trailing three-year period, making it a high risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Biotechnology & Genome 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, PBE 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 Nasdaq Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $4.81 B in assets, iShares Nasdaq Biotechnology ETF has $8.29 B. XBI has an expense ratio of 0.35% and IBB charges 0.47%.

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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Invesco Dynamic Biotechnology & Genome ETF (PBE): ETF Research Reports
 
iShares Nasdaq Biotechnology ETF (IBB): ETF Research Reports
 
SPDR S&P Biotech ETF (XBI): ETF Research Reports
 
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
 
QIAGEN N.V. (QGEN) : Free Stock Analysis Report
 
Alnylam Pharmaceuticals, Inc. (ALNY) : Free Stock Analysis Report
 
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