Launched on 01/31/2006, the SPDR S&P Biotech ETF (XBI) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare – Biotech segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 10, placing it in bottom 38%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $6.89 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare – Biotech segment of the equity market. XBI seeks to match the performance of the S&P Biotechnology Select Industry Index before fees and expenses.
The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.17%.
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, Intellia Therapeutics Inc. (NTLA) accounts for about 1.19% of total assets, followed by Anavex Life Sciences Corp. (AVXL) and Beam Therapeutics Inc. (BEAM).
The top 10 holdings account for about 8.72% of total assets under management.
Performance and Risk
So far this year, XBI has lost about -10.46%, and it’s up approximately 10.67% in the last one year (as of 10/29/2021). During this past 52-week period, the fund has traded between $112.76 and $173.99.
The ETF has a beta of 1.21 and standard deviation of 34.26% for the trailing three-year period, making it a high risk choice in the space. With about 200 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Biotech ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XBI is an excellent option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NYSE Arca Biotechnology ETF (FBT) tracks NYSE Arca Biotechnology Index and the iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. First Trust NYSE Arca Biotechnology ETF has $1.80 billion in assets, iShares Biotechnology ETF has $10.26 billion. FBT has an expense ratio of 0.55% and IBB charges 0.45%.
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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