While investors can bet on single plays, a broad biotech ETF may help investors better diversify into the biotech sector. In an environment of greater merger and acquisitions activity, investors may look to biotech ETFs that target mid- and small-cap companies that may be potential targets down the road.

SEE MORE: Calls For Biotech ETF Rally Gain Steam

For instance, the BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC) tracks potential up-and-coming biotechnology companies that are in the clinical trials stage.

The Loncar Cancer Immunotheraphy ETF (NasdaqGM: CNCR) tracks companies that are developing new classes of therapies.

The ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) focuses on small- and mid-cap companies that have one or more drugs in either Phase II or Phase III U.S. FDA clinical trials.

The PowerShares Dynamic Biotech & Genome (NYSEArca:PBE) included U.S. biotech and genome companies that are engaged in the research, development, manufacture and marketing and distribution of various biotechnological products, services and processes and companies that benefit significantly from scientific and technological advances in biotechnology and genetic engineering and research.

The broader SPDR S&P Biotech ETF (NYSEArca: XBI) follows an equal-weight index of biotechnology companies, with 19.2% in micro-caps, 34.8% small-caps and 26.8% mid-caps.

For more information on the biotech sector, visit our biotechnology category.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.