A Biotech ETF comparison

Filed under: Biotech ETF

Those investors who are looking for a good investment with both short and long term appeal are, in many cases, turning to the biotech ETF market. The biotech industry is considered to be a potential giant which has until now only shown a fraction of its capabilities. What makes the choice of a biotech ETF particularly interesting for investors is that the biotech industry is one which is difficult to predict, and covering several companies in one ETF gives you a better chance of getting it right.

Of course, you still have to choose the right biotech ETF in order to make money, as not all of them are the same. Here is a list of some of the most common ones, to help you make the decision.

1. PowerShares Dynamic Biotechnology (PBE). This fund includes a few companies which supply the biotech industry, rather than the companies which actually make the breakthroughs, possibly giving it a bit more stability and predictability than some of the others.

2. Biotech HOLDRs (BBH). This ETF doesn’t have a huge spread of stocks, with three companies making up an unusually high percentage of the total fund. If you want to invest in Gilead, Biogen or Amgen then you might be interested in this other, otherwise a more diverse selection is a better choice

3. iShares NASDAQ Biotechnology (IBB). These is more diversification on this one, although the biggest representation is by Amgen followed by Teva, which isn’t strictly speaking a biotech company.

4. First Trust NYSE Arca Biotechnology (FBT). This biotech ETF has been the best performer lately, as it includes some companies who aren’t included in the other funds and who have made big gains due to possible buy out whispers.

5. SPDR S&P Biotech ETF (XBI). This is an interesting biotech ETF for investors interested in getting a good spread of the smaller and medium sized companies than dealing in the big boys.

As you can see, taking out a biotech ETF is not just about picking one at random. Some of these funds are more suited to an aggressive investor and some to a more conservative type of person. Recently this sector has made huge profits and all the funds are reports big increases. However, the crucial test for any fund is how it reacts to market drops and uncertainty. The best ETF is one which manages to hold its value through the difficult time and also takes advantage of the good times. This is a sector which is going to continue evolving and giving us all plenty to talk about.

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