Is Invesco Biotechnology & Genome ETF (PBE) a Strong ETF Right Now?

Launched on 06/23/2005, the Invesco Biotechnology & Genome ETF (PBE) is a smart beta exchange traded fund offering 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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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

Managed by Invesco, PBE has amassed assets over $222.17 million, making it one of the average sized ETFs in the Health Care ETFs. Before fees and expenses, PBE seeks to match the performance of the Dynamic Biotechnology & Genome Intellidex Index.

The Dynamic Biotech & Genome Intellidex Index seeks to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 0.07%.

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.

Representing 99.80% of the portfolio, the fund has heaviest allocation to the Healthcare sector.

Taking into account individual holdings, Natera Inc (NTRA) accounts for about 5.34% of the fund's total assets, followed by Neurocrine Biosciences Inc (NBIX) and Gilead Sciences Inc (GILD).

PBE's top 10 holdings account for about 45.87% of its total assets under management.

Performance and Risk

So far this year, PBE has lost about -5.51%, and is down about -2.67% in the last one year (as of 05/20/2025). During this past 52-week period, the fund has traded between $56.01 and $72.24.

The ETF has a beta of 0.79 and standard deviation of 22.19% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Biotechnology & Genome 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.

SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index and the iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. SPDR S&P Biotech ETF has $4.88 billion in assets, iShares Biotechnology ETF has $5.27 billion. XBI has an expense ratio of 0.35% and IBB charges 0.45%.

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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This article originally published on Zacks Investment Research (zacks.com).

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