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Is Invesco Dynamic Biotechnology & Genome ETF (PBE) a Strong ETF Right Now?

Launched on 06/23/2005, the Invesco Dynamic Biotechnology & Genome ETF (PBE) is a smart beta exchange traded fund offering broad exposure to the Health Care ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Invesco. It has amassed assets over $247.05 million, making it one of the average sized ETFs in the Health Care ETFs. PBE seeks to match the performance of the Dynamic Biotechnology & Genome Intellidex Index before fees and expenses.

The Dynamic Biotech & Genome Intellidex Index seeks to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.

PBE's 12-month trailing dividend yield is 0%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.

Taking into account individual holdings, Regeneron Pharmaceuticals Inc (REGN) accounts for about 5.63% of the fund's total assets, followed by Vertex Pharmaceuticals Inc (VRTX) and Amgen Inc (AMGN).

Its top 10 holdings account for approximately 46.83% of PBE's total assets under management.

Performance and Risk

The ETF has lost about -1.85% and was up about 11.03% so far this year and in the past one year (as of 06/07/2023), respectively. PBE has traded between $52.10 and $68.03 during this last 52-week period.

PBE has a beta of 0.87 and standard deviation of 26.84% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Biotechnology & Genome ETF is not a suitable option for investors seeking to outperform the Health Care ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index and the iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $6.82 billion in assets, iShares Biotechnology ETF has $7.61 billion. XBI has an expense ratio of 0.35% and IBB charges 0.44%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco Dynamic Biotechnology & Genome ETF (PBE): ETF Research Reports

Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report

Amgen Inc. (AMGN) : 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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Zacks Investment Research