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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.

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 2, placing it in top 13%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $244.10 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

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.

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

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 5.77% of total assets, followed by Illumina Inc (ILMN) and Celgene Corp (CELG).

The top 10 holdings account for about 46.30% of total assets under management.

Performance and Risk

Year-to-date, the Invesco Dynamic Biotechnology & Genome ETF has added about 9.18% so far, and it's up approximately 5.42% over the last 12 months (as of 05/08/2019). PBE has traded between $43.44 and $60.27 in this past 52-week period.

The ETF has a beta of 1.49 and standard deviation of 24.58% 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.

First Trust NYSE Arca Biotechnology Index Fund (FBT) tracks NYSE Arca Biotechnology Index and the SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index. First Trust NYSE Arca Biotechnology Index Fund has $2.90 B in assets, SPDR S&P Biotech ETF has $4.16 B. FBT has an expense ratio of 0.56% and XBI charges 0.35%.

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
 
SPDR S&P Biotech ETF (XBI): ETF Research Reports
 
First Trust NYSE Arca Biotechnology Index Fund (FBT): ETF Research Reports
 
Illumina, Inc. (ILMN) : Free Stock Analysis Report
 
Celgene Corporation (CELG) : Free Stock Analysis Report
 
Alnylam Pharmaceuticals, Inc. (ALNY) : Free Stock Analysis Report
 
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