A Must-Read Structural Overview of PBE
PBE’s top holdings
The PowerShares Dynamic Biotechnology & Genome Portfolio ETF (PBE) seeks to replicate the investment results of the Dynamic Biotech & Genome Intellidex Index. PBE’s top five holdings are Regeneron Pharmaceuticals (REGN), Amgen (AMGN), Gilead Sciences (GILD), Alexion Pharmaceuticals (ALXN), and Incyte (INCY), which constitute 32.6% of PBE’s total portfolio. PJP’s top holdings have an enormous impact on its performance in the market.
Market performance comparison
The above chart is a mock representation of the market price movement of $100 simultaneously invested in PBE, the SPDR S&P 500 ETF, and NASDAQ on January 1, 2015. The healthcare sector forms one of the largest components of NASDAQ, and SPY has 16% of its total portfolio invested in healthcare. After performing relatively well in the first two quarters of 2015, PBE saw a huge drop in 3Q15. This was mainly because of the biotechnology sector’s weak earnings in 2Q15. NASDAQ performed better than SPY, as the graph shows. PBE underperformed in the market, with a YTD (year-to-date) return of 1.8% less than the market’s YTD return of 3.0%.
As mentioned earlier in this series, PBE’s portfolio consists of high-risk biotechnology stocks. Regeneron Pharmaceuticals, PBE’s top holding, performed outstandingly well in the market, with a TTM (trailing-12-month) return of 43.2%. Incyte also saw a good TTM return, with 62.6%, which also contributed to PBE’s performance.
On the weak side, Amgen and Alexion Pharmaceuticals underperformed in the market, with negative TTM returns of 2.0% and 9.4%, respectively. Of PBE’s 30 holdings, 21 stocks gave positive returns, whereas nine gave negative returns. Read the next part of this series to learn more about PBE’s historical fund inflow in comparison to that of the PowerShares Dynamic Pharmaceuticals ETF (PJP).
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