Designed to provide broad exposure to the Healthcare – Biotech segment of the equity market, the VanEck Biotech ETF (BBH) is a passively managed exchange traded fund launched on 12/20/2011.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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 3, placing it in top 19%.
The fund is sponsored by Van Eck. It has amassed assets over $513.64 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare – Biotech segment of the equity market. BBH seeks to match the performance of the MVIS US Listed Biotech 25 Index before fees and expenses.
The MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment.
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 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.45%.
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, Amgen Inc (AMGN) accounts for about 12.77% of total assets, followed by Gilead Sciences Inc (GILD) and Vertex Pharmaceuticals Inc (VRTX).
The top 10 holdings account for about 63.86% of total assets under management.
Performance and Risk
The ETF has added roughly 4.85% and was up about 2.61% so far this year and in the past one year (as of 01/23/2023), respectively. BBH has traded between $132.48 and $170.13 during this last 52-week period.
The ETF has a beta of 0.84 and standard deviation of 27.79% for the trailing three-year period, making it a high risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers.
VanEck Biotech 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, BBH is a great 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 Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $8.80 billion in assets, iShares Biotechnology ETF has $8.95 billion. XBI has an expense ratio of 0.35% and IBB charges 0.44%.
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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