Biotech ETFs (exchange-traded funds) provide a basket of securities focused on the biotechnology sector. If you’re interested in investing in this industry, these options provide a well-balanced entry into the area. The following ETF biotech options give you ample choices.
- Direxion Daily S&P Biotech Bear 3X Shares (LABD).
- ProSharesUltraPro Short Nasdaq Biotechnology (ZBIO).
- ProSharesUltraShortNasdaq Biotechnology (BIS).
- Loncar China BioPharmaETF (CHNA).
- Invesco Dynamic Biotechnology & Genome ETF (PBE).
- ALPS Medical Breakthroughs ETF (SBIO).
- Invesco S&P SmallCap Health Care ETF (PSCH).
- Global X Longevity Thematic ETF (LNGR).
- iSharesNasdaq Biotechnology ETF (IBB).
- SPDR S&P Biotech ETF (XBI).
- First Trust Amex Biotechnology Index (FBT).
- ARK Genomic REvolution Multi-Sector ETF (ARKG).
- Direxion Daily S&P Biotech Bull 3X Shares (LABU).
- VanEck Vectors Biotech ETF (BBH).
- ProShares Ultra Nasdaq Biotechnology (BIB).
- Principal Healthcare Innovators Index ETF (BTEC).
- Virtus LifeSci Biotech Clinical Trials ETF (BBC).
- Loncar Cancer Immunotherapy ETF (CNCR).
- iShares Genomics Immunology and Healthcare ETF (IDNA).
- Virtus LifeSci Biotech Products ETF (BBP).
- ProSharesUltraProNasdaq Biotechnology (UBIO).
- Global X Genomics & Biotechnology ETF (GNOM).
How to Choose Biotech ETFs
ETFs have become extremely popular among investors. In response, the market has filled with options. There are approximately 2,000 ETFs on U.S. exchanges alone. One of the most difficult parts of working with ETFs is simply choosing the right ones.
- Trading activity: Consider the trading volume for your ETF and whether it fits your own trading style.
- Asset level: In general, you should look for ETFs with at least $10 million in assets to avoid a wide spread and low liquidity. If you choose an ETF with fewer assets, you’ll need to be more mindful in your selection and management.
- Differentiation: There are some highly specialized options in the biotech ETF sector. Whether you’re looking for a mid-cap biotech ETF or 2x leveraged inverse biotech ETFs, you can find just what you’re after. Look for those that are truly original and not merely a clone of another’s approach.
Global X Genomics & Biotechnology ETF (GNOM)
GNOM offers results corresponding to the Solactive Genomics Index, investing 80% or more of its funds in securities on this index. This ETF focuses on companies that will benefit from advancements in genomic science. This is a nondiversified investment.
Direxion Daily S&P Biotech Bear 3X Shares (LABD)
LABD is one of the best biotech ETFs based on performance. It provides a daily leveraged inverse (-3x) bet that’s rebalanced at the end of the day. LABD provides exposure on the S&P Biotechnology Select Industry Index. This choice is ideal for short-term traders seeking modest spreads.
ProShares UltraPro Short Nasdaq Biotechnology (ZBIO)
This ETF seeks to provide daily results that are three times the inverse of the daily performance as based on the NASDAQ Biotechnology Index. This ETF is meant for short-term trading and is not an effective choice if you’re interested in holding on to an ETF for long-term results.
ProShares UltraShort Nasdaq Biotechnology (BIS)
BIS is an ETF for short-term investors, as it focuses on providing daily investment results that are two times the inverse of the NASDAQ Biotechnology Index’s daily performance. It offers a high expense ratio that’s unlikely to provide returns over more than a single day.
Loncar China BioPharma ETF (CHNA)
CHNA provides biotech exposure via a basket of companies in the biopharmaceutical industry. The goal of this fund is to ultimately support China as a global leader in health care. Through this ETF you can invest in drug manufacturers, wholesalers, distributors, and service providers as well as diagnostics companies. This is a prime choice for investors who want exposure to foreign securities.
Invesco Dynamic Biotechnology & Genome ETF (PBE)
PBE follows the Dynamic Biotech & Genome Intellidex Index, which evaluates companies based on criteria such as price and earnings momentum, management action, value, and quality. More than 70% of the 29 holdings in PBE are mid- or small-cap stocks. This ETF sits within the top five performers for the biotech sector.
ALPS Medical Breakthroughs ETF (SBIO)
The market value of SBIO member firms ranges from $200 million to $5 billion. This fund is exclusive to companies that have drugs and treatments in Phase II or Phase III clinical trials. SBIO seeks results that correspond to the performance of the Poliwogg Medical Breakthroughs index.
Invesco S&P SmallCap Health Care ETF (PSCH)
If you’re interested in diversifying your investment, PSCH is a smart choice. This ETF tracks the results of the S&P SmallCap 600 Capped Health Care Index. It offers a combination of small-cap and health care stocks to offer biotechnology exposure. About 72% of the 69 holdings classify as small-cap growth stocks, and more than 19% are biotechnology stocks.
Global X Longevity Thematic ETF (LNGR)
Biotechnology stocks account for about a third of the LNGR fund. This is a thematic ETF that focuses on large rapidly aging populations. It strives to offer investment results corresponding to the Indxx Global Longevity Thematic Index by offering investment opportunities in companies that provide pharmaceuticals, health care, and living facilities for the senior population.
iShares Nasdaq Biotechnology ETF (IBB)
IBB offers a distinct type of coverage by tracking a market-cap-weighted index of pharmaceutical and biotechnology companies on NASDAQ. This approach favors large caps, providing solid exposure to the top companies in these industries. IBB favors pharmaceuticals slightly more than biotech businesses.
SPDR S&P Biotech ETF (XBI)
If you’re interested in an ETF that’s purely invested in biotechnology funds, XBI should top your list of choices. This ETF offers exposure to a broad portfolio of U.S. biotech companies with an emphasis on small-caps and micro-caps. This is a very efficient fund with a strong history of beating its index.
First Trust Amex Biotechnology Index (FBT)
FBT offers an equally weighted basket that’s comprised primarily of small and mid-caps. Results typically correspond to the NYSE Arca Biotechnology Index. FBT’s concentrated index is comprised of 30 names in biotechnology, pharmaceuticals, and medical technology. This makes the fund more concentrated than most.
ARK Genomic Revolution Multi-Sector ETF (ARKG)
ARKG is a managed ETF focused on companies that work with genomics. This includes businesses that develop or produce bioinformatics, stem cells, molecular diagnostics, and targeted therapies. Though this ETF takes a unique approach to its investments, the spread is typically wide with thin liquidity, which may be a concern for some investors.
Direxion Daily S&P Biotech Bull 3X Shares (LABU)
LABU strives to provide 300% of the daily performance of the S&P Biotechnology Select Industry Index. This index features almost 90 securities across the biotechnology and health care sectors. The ETF offers exposure to options and derivatives contracts that are rebalanced at the end of each trading session.
VanEck Vectors Biotech ETF (BBH)
BBH’s portfolio contains 25 U.S.-listed companies in biotechnology, pharmaceuticals, and medical equipment. It seeks to replicate the performance of the MVIS U.S. Listed Biotech 25 Index. Though all the companies are listed in the U.S., some may be foreign businesses. These companies are weighted by capitalization. BBH offers highly liquid assets though it’s a very concentrated fund.
ProShares Ultra Nasdaq Biotechnology (BIB)
BIB is a leveraged ETF based on the NASDAQ Biotechnology Index. It maintains a large-cap bias with a focus on pharmaceutical and biotechnology firms. This ETF is intended for short-term trading. It’s rebalanced daily, and investors are generally advised to hold the funds for no more than a day for the best returns.
Principal Healthcare Innovators Index ETF (BTEC)
BTEC aims to provide results corresponding to the performance of the NASDAQ Healthcare Innovators Index, which features U.S. health care companies with small and medium capitalization. These are primarily businesses that are waiting on regulatory approval and not those with existing products on the market. BTEC also targets companies with negative earnings over the prior year.
Virtus LifeSci Biotech Clinical Trials ETF (BBC)
BBC attempts to provide results corresponding to the performance of the LifeSci Biotechnology Clinical Trials Index. This index follows the performance of biotechnology companies in the clinical trials stage. This creates a small basket of small-cap and micro-cap stocks. BBC is a volatile and high-risk choice, but it also offers the potential for big rewards.
Loncar Cancer Immunotherapy ETF (CNCR)
CNCR provides exposure to a basket of about 30 companies focused on immunotherapy treatments for cancer. This is a focused subset of the biotechnology market. These companies have drugs that are either on the U.S. or European markets or are in human clinical trials. CNCR includes companies with a variety of drug mechanisms and provides equal weighting.
iShares Genomics Immunology and Healthcare ETF (IDNA)
IDNA offers exposure to the top 50 scoring equities in health care equipment, health services, and biopharmaceuticals with a focus on those that can benefit from immunology, genomics, and bioengineering innovations. Companies are scored based on the revenue generated in their respective industries.
Virtus LifeSci Biotech Products ETF (BBP)
This fund strives to provide results corresponding to the performance of the LifeSci Biotechnology Products Index. This follows biotechnology companies that have at least one FDA-approved drug therapy. BBP equally weights its holdings and has large spreads with thin volume, making it a tricky option.
ProShares UltraPro Nasdaq Biotechnology (UBIO)
Investors in UBIO enjoy 3x daily gains and losses of its market-cap-weighted index of pharmaceutical and biotechnology companies listed on the NASDAQ. This is a levered form of IBB offering 3x exposure rather than the 2x exposure of its sibling, BIB. UBIO resets its mixed exposure to swap and equity agreements daily.
Global X Genomics & Biotechnology ETF (GNOM)
GNOM tracks a weighted, market-cap selected index of biotech equities. This ETF focuses on companies involved in genomics, seeking businesses that derive more than half of their income from gene editing, genomic sequencing, biotechnology, computational genomics and genetic diagnostics, and genetic medicines and therapies.
Invest in the biotechnology sector efficiently with a careful selection from these ETFs. To learn more about trading, attend a webinar hosted by an investment expert.