Designed to provide broad exposure to the Healthcare - Biotech segment of the equity market, the iShares Biotechnology ETF (IBB) is a passively managed exchange traded fund launched on February 5, 2001.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways 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 8, placing it in top 50%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $8.36 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. IBB seeks to match the performance of the Nasdaq Biotechnology Index before fees and expenses.
The ICE Biotechnology Index contains securities of NASDAQ listed companies that are classified as either biotechnology or pharmaceuticals.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.44%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.22%.
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, Vertex Pharmaceuticals Inc (VRTX) accounts for about 8.61% of total assets, followed by Gilead Sciences Inc (GILD) and Amgen Inc (AMGN).
The top 10 holdings account for about 48.86% of total assets under management.
Performance and Risk
The ETF has gained about 2.21% so far this year and is up about 26.61% in the last one year (as of 02/17/2026). In that past 52-week period, it has traded between $112.02 and $177.64.
The ETF has a beta of 0.77 and standard deviation of 19.17% for the trailing three-year period, making it a high risk choice in the space. With about 266 holdings, it effectively diversifies company-specific risk.
Alternatives
iShares Biotechnology ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IBB is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
First Trust NYSE Arca Biotechnology ETF (FBT) tracks NYSE Arca Biotechnology Index and the State Street SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index. First Trust NYSE Arca Biotechnology ETF has $2.36 billion in assets, State Street SPDR S&P Biotech ETF has $8.57 billion. FBT has an expense ratio of 0.54%, and XBI charges 0.35%.
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
iShares Biotechnology ETF (IBB): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
