Biotech ETFs: How Do FBT and IBB Match Up on Cost, Structure, and Performance?
First Trust's 30-stock strategy delivered 53.2% returns over one year, but comes with higher concentration risk and a steeper 11-basis-point fee.
Overview
Comparing First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) and iShares Biotechnology ETF (NASDAQ:IBB) reveals a choice between FBT's highly concentrated portfolio and IBB's broader, market-cap-weighted industry exposure.
Both funds target the volatile U.S. biotechnology sector, yet they differ significantly in construction and underlying philosophy. While the iShares fund tracks a wide basket of established and emerging firms, the First Trust fund focuses on a tight group of 30 stocks. This structural difference means investors must choose between broad industry representation and a more concentrated strategy that may deviate significantly from the broader sector's performance. The iShares fund is significantly larger with $9.6 billion in assets under management (AUM), while the First Trust fund manages $2.9 billion in AUM, offering different levels of liquidity for active traders.
Details
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Source
Originally published at www.fool.com.