Biotech ETFs provide investors with exposure to a sector of companies that utilize biological research and cutting edge technology to create products that improve our overall health.
With biotech ETFs there are a number of different categories, but generally they fall into either a broad / general biotech ETF or those that focus on a particular niche of the biotech sector.
Biotech stocks can be risky investments, especially if years of research and testing ends up for not. So if you are looking for a safer way to invest in a sector that has historically provided significant gains and helped to improve health and save lives, then a biotech ETF is worthy of your consideration.
Check out the following list of different types of biotech ETFs (you can click on each ticker for access to a host of insightful charts for each of these biotech ETFs).
Broad Biotech ETFs
Finding it difficult to decide on a specific biotech sub-sector? There are plenty of biotech ETFs that cover a broad spectrum of biotech companies.
Broad biotech ETFs provide diversification that investing in individual biotech stocks does not afford. If one biotech company falls short, there is the potential that the other biotech stocks within the ETF portfolio will serve to limit the downside impact.
Genomics is one of the hottest biotech sub-sectors as biotech companies study our genetic material to solve the mysteries surrounding human healthcare.
The field of genomics covers anything from using our DNA and genes to find cures for disease, to manipulating our genome map to improve the quality of our lives.
Some of the biggest names in the investing world offer biotech ETFs in the field of genomics.
Niche Biotech ETFs
Other biotech ETFs are more niche and focus on specific health issues or specific treatment approaches.
Loncar Cancer Immunotherapy ETF (CNCR) for example provide exposure to biotech companies dedicated to finding a cure for cancer thru immunotherapy (artificial stimulation of the immune system to treat cancer).
Other niche biotech ETFs invest in biotech companies involved in clinical trials at various phases of drug development (ALPS Medical Breakthroughs ETF and Virtus LifeSci Biotech Clinical Trials ETF) while others want to gain exposure to the biotech sector abroad (Loncar China BioPharma ETF).
Leveraged Biotech ETFs
The final type of biotech ETF is the leveraged biotech ETF.
These ETFs track an index of biotech companies or its inverse and apply a multiple in performance (2x, 3x, -2x. -3x).
For example, a 2x leveraged biotech ETF will gain 2% on the day if the index it tracks is up 1%.
Conversely, if that biotech index is down 1%, the 2x leveraged biotech ETF will be down 2%.
Biotech ETFs FAQ
Is there an ETF that tracks biotech stocks?
ETFvest lists 19 biotech ETFs that are currently available to investors in some form or another. Of these, a majority are broad biotech ETFs and four are leveraged.
Do biotech ETFs pay dividends?
Several biotech ETFs pay dividends with the amount depending on the stocks that are held in the portfolio. That said, most biotech ETFs that do pay dividends have a dividend yield less than 1%.
Which biotech ETF has the highest AUM (assets under management)?
ARK Genomic Revolution ETF (ARKG) is the leader with an estimated AUM of over $12 billion. The iShares Nasdaq Biotechnology ETF (IBB) is a close second with an estimated AUM of over $11 billion.
Are there any actively managed biotech ETFs?
The biotech ETFs ARK Genomic Revolution ETF (ARKG) and iShares Evolved U.S. Innovative Healthcare ETF (IDNA) are two actively-managed biotech ETFs.