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

Zacks Equity Research
Chubb (CB) instills investor confidence in the stock with an approval of new share buyback program while also announcing a regular quarterly dividend.
Chubb (CB) instills investor confidence in the stock with an approval of new share buyback program while also announcing a regular quarterly dividend.

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.

Investor-friendly, sector ETFs provide many options 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 7, placing it in top 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $256.02 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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

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.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Amgen Inc (AMGN) accounts for about 5.72% of total assets, followed by Vertex Pharmaceuticals Inc (VRTX) and Regeneron Pharmaceuticals Inc (REGN).

The top 10 holdings account for about 46.97% of total assets under management.

Performance and Risk

The ETF has added roughly 7.98% and is up about 10.56% so far this year and in the past one year (as of 10/30/2018), respectively. PBE has traded between $43.83 and $60.27 during this last 52-week period.

The ETF has a beta of 1.35 and standard deviation of 26.05% 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 holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PBE is an excellent option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

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 $4.36 B in assets, iShares Nasdaq Biotechnology ETF has $8.37 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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PWRSH-DYN BIO (PBE): ETF Research Reports
 
ISHARES NDQ BIO (IBB): ETF Research Reports
 
SPDR-SP BIOTECH (XBI): ETF Research Reports
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
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