BBP’s “focus lends itself to investing in more well-established companies that may be less dependent upon raising capital to fund future growth. This specific biotechnology investing approach may provide a unique niche in which to maintain exposure in the sector while mitigating risk exposure to more volatile clinical-stage companies,” writes Noah Kiedrowski in a Seeking Alpha post.
The BioShares Biotechnology Products Index, the benchmark for BBP, is tilted more toward large-caps, but close to a third of BBP’s selection universe has cancer therapy exposure, giving the ETF ample leverage to one of the hottest biotech themes.
“BBP offers exposure to the entire sector and mitigates that risk by default by honing in on companies with at least one FDA approved treatment. This may serve as a viable alternative to those unwilling to take on a single company investment strategy while still maintaining portfolio exposure to the sector. Considering the long track record of innovative treatments and market performance, BBP may serve as a great satellite holding for any long portfolio with a long-term time horizon to buffer the intrinsic volatility in the biotechnology sector due to the focus of this ETF,” according to Kiedrowski.
BioShares Biotechnology Products ETF