Is First Trust NYSE Arca Biotechnology ETF (FBT) a Strong ETF Right Now?

A smart beta exchange traded fund, the First Trust NYSE Arca Biotechnology ETF (FBT) debuted on 06/19/2006, and offers broad exposure to the Health Care ETFs category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by First Trust Advisors, FBT has amassed assets over $2.86 billion, making it one of the larger ETFs in the Health Care ETFs. FBT, before fees and expenses, seeks to match the performance of the NYSE Arca Biotechnology Index.

The NYSE Arca Biotechnology Index is an equal dollar weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.55%.

It's 12-month trailing dividend yield comes in at 0.00%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.

Looking at individual holdings, Halozyme Therapeutics, Inc. (HALO) accounts for about 4.39% of total assets, followed by Corcept Therapeutics Inc. (CORT) and Natera, Inc. (NTRA).

FBT's top 10 holdings account for about 37.98% of its total assets under management.

Performance and Risk

Year-to-date, the First Trust NYSE Arca Biotechnology ETF return is roughly 27% so far, and is up about 50.41% over the last 12 months (as of 09/11/2026). FBT has traded between $174.06 $273.91 in this past 52-week period.

FBT has a beta of 0.67 and standard deviation of 20.72% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers .

Alternatives

First Trust NYSE Arca Biotechnology ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index and the State Street SPDR S&P Biotech ETF (XBI) tracks S&P Biotechnology Select Industry Index. iShares Biotechnology ETF has $10.27 billion in assets, State Street SPDR S&P Biotech ETF has $10.98 billion. IBB has an expense ratio of 0.44% and XBI changes 0.35%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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First Trust NYSE Arca Biotechnology ETF (FBT): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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