1. iShares NASDAQ Biotechnology ETF (IBB)
The first fund that hails from the life sciences sector needs no introduction. It is the iShares NASDAQ Biotechnology ETF (IBB). Its focus is mainly on biotechnologies, primarily US bases, and its market capitalization is worth nearly $9.5 billion. The IBB is highly liquid and trades at an impressive level of over 1 million shares per day. Its top holdings are in top-tier companies like Amgen, Gilead, and Moderna, which have a high degree of influence on the sector’s performance. Although it has a higher expense ratio (0.46%), the substantial returns over the years have been seen to justify this cost.
2. Health Care Select Sector SPDR Fund (XLV)
Next on the list is the Health Care Select Sector SPDR Fund (XLV). This fund encompasses a broader range of healthcare stocks, including biotechnology, healthcare services, pharmaceuticals, and more. With over $25 billion in assets, it is one of the largest and most traded healthcare ETFs. The fund’s focus is on diverse health care segments with top holdings like Johnson & Johnson, Pfizer, and United Health Group. While this fund is slightly more expensive than the IBB with an expense ratio of 0.13%, it optimally diversifies risk while seeking to provide a convenient, single point of access to a variety of health care sub-sectors.
3. ARK Genomic Revolution ETF (ARKG)
Pioneering the field of genomics and biotech innovation, the ARK Genomic Revolution ETF (ARKG) is an actively managed fund that offers investors exposure to companies in the evolving space of genomics, including gene editing, agricultural biology, and healthcare innovation. Though relatively smaller with assets totaling just over $9.3 billion, its five-year returns rate has been stellar, maximizing returns for investors who are willing to hold for longer periods. It has a slightly higher expense ratio of 0.75%, indicating it as the costliest but potentially most rewarding options on this list.
4. VanEck Vectors Biotech ETF (BBH)
The VanEck Vectors Biotech ETF (BBH) targets the MVIS US Listed Biotech 25 Index, focusing on the overall performance of the largest and most liquid U.S. companies involved in biotechnologies. The unique attribute of this ETF is its equal-weight strategy, keeping the fund balanced with equivalent allocations to all stocks, thus reducing risk while maintaining exposure to the sector’s potential growth. With an expense ratio of 0.35%, this fund strikes a balance between cost and opportunity.
5. SPDR S&P Biotech ETF (XBI)
Rounding out the list is the SPDR S&P Biotech ETF (XBI), a fund that focuses solely on the biotech subsector. It’s broad, providing exposure to large, mid and small cap equities. Thanks to its equally-weighted approach across all holdings, no single stock can drastically influence the overall performance of the fund. It’s favored by those seeking to spread their investments across a diversified range of biotech companies. The XBI also has a low expense ratio of 0.35%, delivering value-for-money exposure to the biotech industry.
Please note that investment in ETFs requires substantial research and understanding of market trends and, in some cases, specialized knowledge in the life sciences sector. Always remember that all investments carry risks, and past performance is not indicative of future results. It is always advisable to consult with a professional investment advisor before escalating any potential investment commitment.