ETFs for the Next Biotech Takeover Targets

The PowerSharesDynamic Biotechnology & Genome Portfolio (NYSEArca: PBE) features BioMarin as its second-largest holding at a weight of 5.2% and a 2.8% weight to Incyte. Pharmacyclics is PBE’s largest holding at 5.8%.

PBE, which was 2014’s third-best sector ETF trailing two other biotech funds and is up another 10.3% this year, tracks an index that evaluates companies for inclusion based on “price momentum, earnings momentum, quality, management action, and value,” according to PowerShares.

The First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT), an ETF that frequently finds itself in the middle of the biotech takeover chatter, allocates just over 7% of its combined weight to Incyte and Biomarin. The ETF also features a now 5.3% weight to Phamacyclics after holding one of the larger allocations to that stock when the company announced it was mulling a sale of itself. [A Familiar ETF Will Like Pharmacyclics Sale]

Close a third of FBT’s 30 holdings have been mentioned as possible takeover targets and nearly 20% of the ETF’s members could be acquirers of those targets.

PowerShares Dynamic Biotechnology & Genome Portfolio