Biotech ETFs: How Do FBT and IBB Match Up on Cost, Structure, and Performance?

Jake Lerch, The Motley Fool

Sun, July 12, 2026 astatine 2:50 PM CDT 6 min read

Comparing First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) and iShares Biotechnology ETF (NASDAQ:IBB) reveals a prime betwixt FBT's highly concentrated portfolio and IBB's broader, market-cap-weighted manufacture exposure.

Both funds people the volatile U.S. biotechnology sector, yet they disagree importantly successful operation and underlying philosophy. While the iShares money tracks a wide handbasket of established and emerging firms, the First Trust money focuses connected a choky radical of 30 stocks. This structural quality means investors indispensable take betwixt wide manufacture practice and a much concentrated strategy that whitethorn deviate importantly from the broader sector's performance. The iShares money is importantly larger with $9.6 cardinal successful assets nether absorption (AUM), portion the First Trust money manages $2.9 cardinal successful AUM, offering antithetic levels of liquidity for progressive traders.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

The iShares money is the much affordable introduction constituent for investors, carrying an disbursal ratio of 0.44% compared to 0.55% for the First Trust fund. This 11-basis-point quality tin interaction semipermanent full returns, peculiarly successful the high-growth biotechnology sector.

Performance & hazard examination

What's wrong

The First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) offers concentrated vulnerability to the healthcare sector, which accounts for 100% of its portfolio. It focuses connected terms movements and income generated by the NYSE Arca Biotechnology Index done a methodology covering conscionable 30 positions. This precocious grade of attraction tin pb to higher idiosyncratic hazard compared to broader marketplace benchmarks. Its largest positions see Corcept Therapeutics (NASDAQ:CORT) astatine 5.84%, NeoGenomics (NASDAQ:NEO) astatine 4.88%, and Veracyte (NASDAQ:VCYT) astatine 4.76%. The money was launched successful 2006.

The iShares Biotechnology ETF (NASDAQ:IBB) besides focuses wholly connected the healthcare assemblage but provides overmuch broader diversification with 248 holdings. Because it mirrors an scale of publically traded U.S. biotechnology stocks utilizing a market-cap-weighted approach, its show is much heavy influenced by the industry's largest and astir established players. This diversification whitethorn assistance creaseless retired immoderate of the volatility inherent successful the biotech space. Its largest positions see Vertex Pharmaceuticals (NASDAQ:VRTX) astatine 7.84%, Amgen (NASDAQ:AMGN) astatine 7.69%, and Gilead Sciences (NASDAQ:GILD) astatine 7.11%. This money was launched successful 2001.