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

Zacks Equity Research

Looking for broad exposure to the Healthcare - Biotech segment of the equity market? You should consider the Invesco Dynamic Biotechnology & Genome ETF (PBE), a passively managed exchange traded fund launched on 06/23/2005.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $233.71 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 0.57%, making it on par with most peer products in the space.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Biogen Inc (BIIB) accounts for about 6.28% of total assets, followed by Vertex Pharmaceuticals Inc (VRTX) and Neurocrine Biosciences Inc (NBIX).

The top 10 holdings account for about 50.41% of total assets under management.

Performance and Risk

Year-to-date, the Invesco Dynamic Biotechnology & Genome ETF has added roughly 17.18% so far, and it's up approximately 7.20% over the last 12 months (as of 11/27/2019). PBE has traded between $43.44 and $56.26 in this past 52-week period.

The ETF has a beta of 1.43 and standard deviation of 22.73% for the trailing three-year period, making it a high risk choice in the space. With about 29 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 reasonable 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 $4.20 B in assets, iShares Nasdaq Biotechnology ETF has $7.54 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
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
Biogen Inc. (BIIB) : Free Stock Analysis Report
 
Neurocrine Biosciences, Inc. (NBIX) : Free Stock Analysis Report
 
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