Which biotech ETF passes the test? National Edition

You still have to pick the actual index product. There are two biotech ETFs traded -- the iShares Nasdaq Biotechnology Index Fund (IBB/AMEX) and the Biotech HOLDRs Trust (BBH/AMEX). In 2005, performance of the two ETFs has diverged considerably -- one is well down, the other well up! In contrast, th...

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Bibliographic Details
Published inNational post (Toronto)
Main Author Kirzner, Eric
Format Newspaper Article
LanguageEnglish
Published Don Mills, Ont Postmedia Network Inc 07.06.2005
Subjects
Biotechnology industry
Pharmaceutical industry
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Summary:You still have to pick the actual index product. There are two biotech ETFs traded -- the iShares Nasdaq Biotechnology Index Fund (IBB/AMEX) and the Biotech HOLDRs Trust (BBH/AMEX). In 2005, performance of the two ETFs has diverged considerably -- one is well down, the other well up! In contrast, the Biotech HOLDRs ETF has gained 12.4% thus far in 2005. Biotech HOLDRs represents ownership of 18 different companies in the biotech field, with each held in various proportions, following the American Stock Exchange biotechnology HOLDRs index. The largest allocations are to Amgen (23%), Genentech Inc. (42%) and Gilead Sciences (7.8%). Most of the 18 companies in the BBH portfolio are down on the year, but Genentech (DNA/NYSE), which comprises 43% of the index, is ahead by 49.2% on the year. That explains why BBH is ahead. So which biotech ETF should you buy? Despite BBH's recent performance, I would pick the less-concentrated, more-diversified IBB as the more representative index product if you want biotech exposure in your portfolio.
ISSN:1486-8008