Proprietary Data Insights
Financial Pros’ Top Biotech ETF Searches in the Last Month
The Biotech ETF Poised for Growth in 2023
Biotech investing is all about the odds.
You see, most startups in the sector fail. But when they win, they win BIG!
That’s why it’s difficult for most investors to try and pick individual winners and losers.
But spread your risk amongst dozens of stocks, and diversification takes over.
Today, we look at the top biotech ETF sought out by financial pros at a rate that’s more than 100x the next closest search.
However, as you’ll find out by the end of the article, there’s a much better option for those interested in biotech investing.
Key Facts About XBI
If you’re looking for a biotech ETF, SPDR S&P Biotech ETF XBI is the most popular by a mile.
With almost $7 billion in net assets, the ETF tracks the performance of the S&P Biotechnology Select Industry Index.
The top holdings won’t mean much to you unless you’re well-versed in biotechnology companies.
What you should know is that other than the top holding, no one stock makes up more than 2% of the total portfolio, giving it a fairly even weighing across the board.
The ETF is a passively managed fund, allowing the issuer to keep expenses at a reasonable 0.35%.
This isn’t a fund for dividends as they are rare and small.
The 1990s were primetime for biotech and pharmaceutical companies.
Since then, the industry has gone through boom and bust cycles.
However, Covid may have changed the game as many countries are now focused on delivering better healthcare at lower costs while fighting the diseases of tomorrow.
Although biotech is a specific niche, there are several funds to choose from, both active and passive:”
Of the ETFs listed, the XBI and IBB may look similar. However, the IBB has delivered much better returns with a more diversified portfolio.
Our Opinion 5/10
In our opinion, the IBB is a much better way to play biotechnology and we’d rate it a 10/10.
It offers better overall performance, diversification, and a slightly better dividend yield that offsets the expense ratio differences.
The XBI may be more popular. But for our money, IBB is the way to go.
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