Small-cap exposure has been a contributing factor to PBE’s almost 50% gain this year, a performance that makes the fund 2013’s second-best biotech ETF. PBE does devote almost 53% of its weight to large-caps, but small-caps account for another 45.1%.
That is an important trait for any biotech ETF to offer investors because small-caps are not only levered to FDA drug approvals just their large-cap peers are, but smaller biotech stocks often highlighted as potential takeover targets for the Amgens, Gileads and blue-chip pharmaceuticals companies of the world. The average market value of PBE’s holdings is $14.3 billion compared to almost $25.1 billion for IBB.
PowerShares Dynamic Biotechnology & Genome Portfolio
ETF Trends editorial team contributed to this article.