Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the VanEck Biotech ETF (BBH) is a passively managed exchange traded fund launched on 12/20/2011.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by Van Eck. It has amassed assets over $447.15 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. BBH seeks to match the performance of the MVIS US Listed Biotech 25 Index before fees and expenses.
The MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.41%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.
Looking at individual holdings, Amgen Inc (AMGN) accounts for about 16.74% of total assets, followed by Vertex Pharmaceuticals Inc (VRTX) and Gilead Sciences Inc (GILD).
The top 10 holdings account for about 70.20% of total assets under management.
Performance and Risk
The ETF has added roughly 5.94% so far this year and was up about 17.27% in the last one year (as of 10/22/2024). In that past 52-week period, it has traded between $143.93 and $182.72.
The ETF has a beta of 0.74 and standard deviation of 21.39% for the trailing three-year period, making it a high risk choice in the space. With about 27 holdings, it has more concentrated exposure than peers.
Alternatives
VanEck Biotech ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, BBH is a reasonable option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
IShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index and the SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index. IShares Biotechnology ETF has $7.28 billion in assets, SPDR S&P Biotech ETF has $7.30 billion. IBB has an expense ratio of 0.45% and XBI charges 0.35%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Get it free >>VanEck Biotech ETF (BBH): ETF Research Reports
Amgen Inc. (AMGN) : Free Stock Analysis Report
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
iShares Biotechnology ETF (IBB): ETF Research Reports
SPDR S&P Biotech ETF (XBI): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
