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Could it be time to invest in a biotech ETF? This was supposed to be the biotech century, where innovation was to lead to efficient, sustainable energy and gene-based drugs were to replace chemically-formulated compounds. Biotech innovation was to lead to efficient and sustainable fuels.
Biotech ETF is an exchange-traded fund that consists of a basket of few Biotechnology firms.
There are currently five popular biotech ETFs, each differing by the number of stocks held and the indices mirrored. These five include:
- SPDR Biotech ETF (XBI): Standard & Poor's Depository Receipts or SPDRs is a US-based exchange-traded fund which is specifically linked to the S&P 500. SPDRs belong to a family of exchange-traded funds managed by State Street Global Advisors, called the SPDR ETFs.
The SPDR S&P Biotech ETF seeks to closely match the returns and characteristics of the S&P Biotechnology Select Industry Index.
- PowerShares Dynamic Biotech & Genome (PBE):
The PowerShares Dynamic Biotechnology & Genome Portfolio Fund seeks to replicate the Dynamic Biotechnology & Genome Intellidex Index, which is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
- iShares NASDAQ Biotechnology (IBB): The iShares Nasdaq Biotechnology Index Fund seeks to provide investment results generally equivalent to companies primarily engaged in the biotechnology industry, as represented by the NASDAQ Biotechnology Index.
- First Trust AMEX Biotechnology (FBT): The investment objective of the First Trust AMEX Biotechnology Index Fund is to replicate as closely as possible the price and yield of the AMEX Biotechnology Index.
- Biotech HOLDRs (BBH): Biotech HOLDRS are depositary receipts issued by the Biotech HOLDRS Trust, and represent an undivided beneficial ownership in the common stock or American depositary shares of a group of specified companies that are involved in various segments of the biotechnology industry.
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