Healthcare Hot Stocks – Biotechnology, First Trust NYSE Arca Biotechnology Index Fund (FBT)
While biotechnology stocks have cooled off significantly from their run last year, one ETF has continued to put up impressive results. The First Trust NYSE Arca Biotechnology Index Fund (FBT) has more than $1.2 billion invested in just 20 biotechnology companies with an equal-weighted portfolio structure.
This concentrated basket of stocks allows for each holding to contribute a proportionate share of the total performance, which thanks to several hot stocks has combined to generate positive returns of 20% this year. The stocks in FBT are rebalanced on a quarterly basis to ensure the weightings remain in line with the index specifications.
This focused exposure also can work against the concept of diversification that ETFs have become so famous for, however. An ETF with fewer holdings can be subject to additional volatility if one stock fails to perform with the group. But for the time being, the FBT portfolio appears to be firing on all cylinders.
PBT charges 0.6% in expenses.