Generally speaking, the biotechnology exchange traded funds trade has been relatively easy. Save for bumps in the road here and there, investors could have purchased any of the traditional plain vanilla biotech ETFs over the past year and made money.
That does not diminish the need for studying an ETF’s underlying components, which after all are responsible for driving the fund’s performance. A pair of new, upstart biotech ETFs have made some constituent changes that investors should note.
The BioShares Biotechnology Products Fund (NasdaqGM: BBP), which debuted in December, is expanding its lineup to 39 from 33 as part of the ETF’s semi-annual rebalancing and recomposition.
BBP tracks the BioShares Biotechnology Products Index, which is also sponsored by LifeSci Index Partners. That index follows U.S.-listed biotech companies with a primary product offering or product candidate that has landed FDA approval. [New Breed Biotech ETFs]
“Biotechnology Product companies, such as those found in BBP, have developed at least one drug that has been approved by the Food and Drug Administration (FDA) and has gone into commercial production. These companies devote their energies toward sales and marketing, attempting to raise awareness of their new product launches,” according to BioShares.
BBP has surged 26.4% since coming to market. The ETF allocates more than 5% of its weight to three stocks – Halozyme Therapeutics (NasdaqGS: HALO), Exelixis (NasdaqGS: EXEL) and Anacor Pharmaceuticals (NasdaqGS: ANAC). BBP’s top 10 holdings combine for over 43% of the ETF’s weight. Investors have allocated $20.2 million to the ETF.