For investors seeking to apply this methodology to their portfolio in the Biotechnology sector, we have taken a closer look at the top ranked BBH. This ETF, with a Zacks ETF Rank of 1 or ‘Strong Buy’, is detailed below.
BBH in Focus
Launched in December 2011, Market Vectors Biotech ETF (NYSEARCA:BBH) is a passively managed fund designed to track the performance of the Market Vectors U.S. Listed Biotech 25 Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
The index includes small and medium-capitalization companies and foreign companies that are listed on a U.S. exchange. Since inception the product has amassed $436.6 million in assets.
With holdings of 26 stocks, the fund is highly concentrated in the top 10 holdings which account for about 65% of its total assets. In terms of market cap levels, large cap stocks take almost a 64% share in the fund while mid-caps take 32% and small-cap securities share the rest. Style-wise, BBH is tilted more towards growth stocks, while a thin share is taken by value stocks.
From an individual holdings point of view, the top three are Gilead Sciences Inc., Amgen Inc. and Celgene Corp. with as asset share of 11.40%, 10.28% and 7.31%, respectively.
In terms of industry exposure, almost 90% of assets are allocated to biotechnology while the rest are taken up by pharmaceuticals (read: 3 Impressive Biotech ETFs Crushing the Market).
Given its average trade size, the product is not as popular as its counterparts as it trades in an average daily volume of 108,600 shares a day. The fund is easy on the pocketbook though, charging investors 35 bps in fees which is lower than the category average of 46bps.
While BBH may not take the top spot in terms of AUM and trading size, in terms of performance it has beaten many of the titans in the category. BBH has given sturdy returns of about 44.6% on a year-to-date basis and over 50.6% in the trailing one-year period.
The Bottom Line
The biotechnology sector has been a strong performer so far in 2013 and analysts opine that the trend may continue for the rest of the year. This could prove to be especially true if this earnings season is a good one, as it would erase some of the shakiness investors have seen lately in the space, and suggest that another rally is at hand for BBH.
This article is brought to you courtesy of Eric Dutram.