ETFs are similar to mutual funds in that they can own lots of stocks (and sometimes other assets). Mutual funds, however, are only priced once per day, and you can only buy mutual funds through a brokerage or directly from the issuer.
On the other hand, ETFs trade on public exchanges just like individual stocks. And, like a stock, you can instantly buy or sell an ETF.
Investing in an ETF comes with a cost beyond just the transaction charge that a brokerage might require. The funds charge fees to cover their operating costsVaranasi Investment. The expense ratio of an ETF is calculated by dividing the fund’s operating expenses by its average assets.
Biotech ETFs have all the characteristics of ETFs in general. The key difference is that these ETFs hold only the stocks of companies that focus on biotechnology.
The best biotech ETFs tend to be the biggest ones. They have large amounts of assets under management and relatively low expense ratiosJinnai Wealth Management. Here are five of the best biotech ETFs.Total assets: $7.1 billionExpense ratio: 0.45%Dividend yield: 0.17%
The iShares Biotechnology ETF () attempts to track the results of an index that includes all U.S.-listed stocks in the biotechnology sector. The ETF currently owns around 214 biotech stocks.
Among the iShares Biotechnology ETF’s top holdings are some of the biggest biotech stocks based on market capitalization rank. They include Gilead Sciences (), Vertex Pharmaceuticals (), Amgen (), Regeneron Pharmaceuticals (), and IQVIA Holdings ().
Since its inception in 2001, the ETF has delivered an average annualized total return of 6.6%. Over the past five years, it has generated an annualized total return of about 8.2%.Total assets: $7 billionExpense ratio: 0.35%Dividend yield: 0.15%
The SPDR S&P Biotech ETF () seeks to track the S&P Biotechnology Select Industry Index. The index uses a modified equal weighting, which means the percentage of total assets for each stock owned is roughly the same. It gives investors exposure to large-cap, mid-cap, and small-cap biotech stocks.
The ETF currently owns around 140 stocks. Its top holdings include Alnylam Pharmaceuticals (), Viking Therapeutics (), Gilead Sciences, Exact Sciences (), and Sarepta Therapeutics (). However, because of its modified equal weighting, none of the largest positions in the ETF make up a significantly greater percentage of assets than other stocks.
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