Making its debut on 06/23/2005, smart beta exchange traded fund Invesco Biotechnology & Genome ETF (PBE) provides investors broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $260.21 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.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.02%.
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.
For PBE, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
When you look at individual holdings, United Therapeutics Corp (UTHR) accounts for about 6.33% of the fund's total assets, followed by Illumina Inc (ILMN) and Regeneron Pharmaceuticals Inc (REGN).
PBE's top 10 holdings account for about 48.13% of its total assets under management.
Performance and Risk
The ETF has gained about 3.35% and is up roughly 32.57% so far this year and in the past one year (as of 06/12/2026), respectively. PBE has traded between $63.38 and $85.73 during this last 52-week period.
PBE has a beta of 0.72 and standard deviation of 19.78% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 33 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.
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 $7.97 billion in assets, iShares Biotechnology ETF has $7.95 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
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Invesco Biotechnology & Genome ETF (PBE): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).