A smart beta exchange traded fund, the First Trust NYSE Arca Biotechnology ETF (FBT) debuted on 06/19/2006, and offers 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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 managed by First Trust Advisors. FBT has been able to amass assets over $2.34 billion, making it one of the larger ETFs in the Health Care ETFs. FBT, 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.
Operating expenses on an annual basis are 0.54% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.00%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.
Taking into account individual holdings, Gilead Sciences, Inc. (GILD) accounts for about 4.23% of the fund's total assets, followed by Moderna, Inc. (MRNA) and Alkermes Plc (ALKS).
FBT's top 10 holdings account for about 37.48% of its total assets under management.
Performance and Risk
The ETF has lost about -0.55% and is up roughly 17.05% so far this year and in the past one year (as of 03/03/2026), respectively. FBT has traded between $145.67 and $221.86 during this last 52-week period.
The fund has a beta of 0.67 and standard deviation of 19.51% for the trailing three-year period, which makes FBT a high risk choice in this particular 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.
State Street SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index and the iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. State Street SPDR S&P Biotech ETF has $8.31 billion in assets, iShares Biotechnology ETF has $8.63 billion. XBI has an expense ratio of 0.35% and IBB changes 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.
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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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