Making its debut on 06/19/2006, smart beta exchange traded fund First Trust NYSE Arca Biotechnology ETF (FBT) provides investors broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.15 billion, making it one of the larger ETFs in the Health Care ETFs. This particular fund, before fees and expenses, seeks to match the performance of the NYSE Arca Biotechnology Index.
The NYSE Arca Biotechnology Index is an equal dollar weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.54%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.62%.
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.
For FBT, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
Looking at individual holdings, Genmab A/s (adr) (GMAB) accounts for about 4.57% of total assets, followed by Alnylam Pharmaceuticals, Inc. (ALNY) and United Therapeutics Corporation (UTHR).
FBT's top 10 holdings account for about 40.23% of its total assets under management.
Performance and Risk
The ETF has added about 14.7% so far this year and it's up approximately 14.36% in the last one year (as of 10/28/2025). In the past 52-week period, it has traded between $145.67 and $190.64
The ETF has a beta of 0.65 and standard deviation of 19.46% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust NYSE Arca Biotechnology ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index and the SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index. iShares Biotechnology ETF has $6.55 billion in assets, SPDR S&P Biotech ETF has $6.85 billion. IBB has an expense ratio of 0.44% and XBI changes 0.35%.
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.
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First Trust NYSE Arca Biotechnology ETF (FBT): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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