What Is a Biotechnology ETF?

A biotechnology industry exchange-traded fund (ETF) invests in companies that combine biology and technology to develop innovative products and services. ETFs usuaꩵlly track a particular index, sector, commodity, or other asset and can be purchased or sold on a stock exchange.

Types of Biotechnology ETFs

Biotech ETFs invest in companies whose technologies include DNA technology, molecular biology, genetic engineering, drug trials, and genomics. A biotechnology company may have several products at various stages of development, ranging from initial feasibility to advanced 澳洲幸运5官方开奖结果体彩网:clinical trials. Products and services from such🍃 biotechnology companies generally cluster in healthcare but may also address agriculture and the environment.🧔

Because of extremely high 澳洲幸运5官方开奖结果体彩网:research and development costs coupled with very little revenue during the years of development, many biotechnology companies must partner with larger firms to complete product development. Smaller companies maಞy potentially produce a product that increases valuation signifi🐎cantly.

As of November 2023, pop🀅ular biotech ETFs include:

• iShares Biotechnology ETF (IBB): IBB tracks the investment results of an index composed of equities in the biotechnology sector. Holdings include 261 companies, including Moderna nc., Gilead Sciences, and Amgen Inc., with net assets over $6.4 billion. The expense ratio is 0.45%.
• SPDR S&P Biotech ETF (XBI): This ETF corresponds to the performance of the S&P Biotechnology Select Industry Index. Top holdings include Mirati Therapeutics Inc. and CRISPR Therapeutics, with over $6 billion AUM and an expense ratio of 0.35%.
• ARK Genomic Revolution ETF (ARKG): ARKG is an actively managed ETF that invests in companies focusing on technologies such as targeted therapeutics, stem cell research, and agricultural biology. Of approximately 50 holdings, companies include Exact Sciences Corp. and Teladoc Health Inc. The expense ratio is 0.75%.
  

Investing in Biotech ETFs

When investing in biotech, investors not only consider earnings or revenue but also the potential for 澳洲幸运5官方开奖结果体彩网:Food and Drug Administration (FDA) approvals. A biotech ETF 澳洲幸运5官方开奖结果体彩网:offers exposure to the sector wi꧟thout requiring the investor to do the extensive fundamental research necessary to evaluate individual biote൲chnology companies.

An ETF is a 澳洲幸运5官方开奖结果体彩网:marketable security that tracks an index, a commodity, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily 澳洲幸运5官方开奖结果体彩网:liquidity an🔥d lower fees than mutual fund shares, making the🎃m an attractive alternative for individual investors.

ETF investors gain 澳洲幸运5官方开奖结果体彩网:diversification of an index fund and the ability to sell short, buy on margin, and purchase as little as one share. Another advantage is that the 澳洲幸运5官方开奖结果体彩网:expense ratios for most ETFs are lower than those of the⛎ average mutual fund. When buying and selling ETFs, investors generally pay the same commission to a broker that they would on any regular order.

The Bottom Line

Biotechnology ETFs invest in companies that combine biology and technology to develop innovative products and services. The sector generally focuses on healthcare, pharmaceuticals, molecular science, and DNA technology. ETFs track a particular index, sector, commodity, or other asset that investors can purchase through an exchange.