The Landscape Of Biotech ETFs

According to ETF.com, there are 15 biotech ETFs trading in the U.S. market with total asset over $16 Billion.

iShares NASDAQ Biotechnology ETF (IBB) is the largest one in terms of AuM, accumulating $ 7.57 Billion as of Jan 07, 2019. The inception date of IBB is Jan 2001, it tracks NASDAQ-listed biotech companies with pharmaceutical companies also being included. There are over 180 holdings as of recent. The key eligible criteria is for companies to be classified according to the Industry Classification Benchmark (ICB) as either biotechnology or pharmaceutical.

Invesco Dynamic Biotechnology & Genome ETF (PBE) is the best performer among the 15 with an annual return of ~13% since its issuing date on 06/23/2005. However, the AuM of PBE is mere $282 Million. The underlying lying index is developed based on FactSet Revere Hierarchy classification system. The superior performance can be accounted for by the unique classification system as well as the equal-weighting schema.

What’s worth mentioning is the Virtus LifeSci Biotech Clinical Trials ETF (BBC), which is based on the LifeSci Biotechnology Clinical Trials Index. The index developer is LifeSci Index Partners, they distinguish Clinical Trials companies and Products companies into two distinct categories. According to their methodology listed on its website, various data sources are used for filter companies.

Similarly, Loncar Cancer Immunotherapy ETF (CNCR) which tracks the Loncar Cancer Immunotherapy Index, has about 30 companies of various sizes that have approved immunotherapy cancer drugs on the US or European markets or that are engaged in human clinical trials of such drugs. This index is mostly constructed based on one person’s expertise, the total number of holdings is about 23, according to the info on its website:

“Immunotherapy, or harnessing the body’s own immune system, is changing the way many cancers are treated. While traditional medicines like chemotherapies often give cancer a broad punch, the benefit of using immunotherapy is derived from the immune system’s dynamic nature and the way it can more precisely be tailored to fight a patient’s disease.Interferon alpha (IFN-α), a cytokine, was the first cancer immunotherapy approved in 1986.  Antibody therapies that facilitate the destruction of cancer cells by the immune system have been widely used since 1997, and the first cell-based immunotherapy, a cancer vaccine to treat prostate cancer, was approved in 2010.Today, many new classes of therapies, including checkpoint inhibitors, next generation vaccines, oncolytic viruses, and chimeric antigen receptor (CAR) technologies, are being developed. It is the progress of these new therapies that the LCINDX aims to track.

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