Is the First Trust NYSE Arca Biotechnology ETF (FBT) Currently a Top ETF Choice?

Overview of First Trust NYSE Arca Biotechnology ETF (FBT)

Launched on June 19, 2006, the First Trust NYSE Arca Biotechnology ETF (FBT) is a smart beta exchange traded fund that provides investors with broad access to the Health Care ETF sector.

Understanding Smart Beta ETFs

Traditionally, most ETFs have tracked market capitalization-weighted indexes, which are designed to reflect the overall market or a specific segment. These indexes are ideal for investors who believe in market efficiency, as they offer a low-cost, straightforward way to mirror market returns.

For those aiming to outperform the market through strategic stock selection, smart beta ETFs present an alternative. These funds follow non-market cap weighted strategies, focusing on stocks with favorable risk and return profiles. Selection is often based on fundamental metrics or a combination of factors.

There are various smart beta approaches, such as equal weighting, fundamental weighting, and strategies based on volatility or momentum. However, not all of these methods have consistently produced superior returns.

Fund Management and Index Details

First Trust Advisors oversees the management of FBT. The fund has accumulated over $2.34 billion in assets, positioning it among the larger Health Care ETFs. FBT aims to replicate the performance of the NYSE Arca Biotechnology Index, before fees and expenses.

The NYSE Arca Biotechnology Index uses an equal dollar weighting system and tracks a diverse group of biotechnology companies that utilize biological processes to create products or offer services.

Fees and Expenses

Expense ratios play a crucial role in an ETF’s total return. Over time, funds with lower costs can outperform more expensive alternatives, assuming all other factors are equal.

FBT has an annual operating expense ratio of 0.54%, which is comparable to similar ETFs in its category.

The fund currently does not offer a trailing 12-month dividend yield.

Sector Allocation and Major Holdings

ETFs are known for their transparency, often disclosing holdings daily and providing diversified exposure to reduce individual stock risk. Nonetheless, investors should still review a fund’s portfolio.

FBT is fully allocated to the Healthcare sector. Its largest holding is Gilead Sciences, Inc. (GILD), representing about 4.23% of assets, followed by Moderna, Inc. (MRNA) and Alkermes Plc (ALKS).

The top ten holdings make up approximately 37.48% of the fund’s total assets.

Performance and Risk Profile

As of March 3, 2026, FBT has declined by roughly 0.55% year-to-date but has gained about 17.05% over the past year. During the last 52 weeks, its price has ranged from $145.67 to $221.86.

With a beta of 0.67 and a three-year standard deviation of 19.51%, FBT is considered a higher-risk option within its category. The fund holds around 31 stocks, resulting in a more concentrated portfolio compared to some peers.

Other ETF Options

FBT is a solid choice for those seeking to outperform the Health Care ETF segment, but alternative funds are available. The State Street SPDR S&P Biotech ETF (XBI) tracks the S&P Biotechnology Select Industry Index, while the iShares Biotechnology ETF (IBB) follows the Nasdaq Biotechnology Index. XBI manages $8.31 billion in assets with a 0.35% expense ratio, and IBB holds $8.63 billion with a 0.44% expense ratio.

Investors interested in lower-cost, lower-risk options might consider traditional market cap-weighted ETFs that aim to match the Health Care sector’s returns.

Conclusion

To explore more about FBT and other ETFs, use screening tools to find funds that align with your investment goals and stay updated with the latest ETF news and analysis.