A Big Biotech ETF Is About To Get Cheaper

A big biotechnology exchange traded fund will soon get a lower price tag. BlackRock Inc. BLK, the parent company of iShares, the world's largest ETF sponsor, announced a share split for the iShares Nasdaq Biotechnology ETF IBB.

“The Board has approved a 3-for-1 split for this fund for shareholders of record as of the close of business on November 28, 2017, payable after the close of trading on November 30, 2017,” according to iShares. “The 3-for-1 split will lower the share price and increase the number of outstanding shares. The total value of shares outstanding is not affected by a split.”

IBB, the largest biotechnology ETF by assets, closed around $314 on Tuesday. The ETF celebrated 10 years on the market last month.

More On IBB

IBB tracks the Nasdaq Biotechnology Index and holds almost 160 stocks. The ETF is cap-weighted, meaning it features significant allocations to the largest biotechnology companies.

For example, Biogen Inc BIIB, Amgen, Inc. AMGN and Gilead Sciences, Inc. GILD combine for 24 percent of the ETF's weight. Regeneron Pharmaceuticals Inc. REGN and Celgene Corporation CELG combine for 13.6 percent of IBB's weight. Overall, IBB's top 10 holdings combine for about 54 percent of the fund's weight.

IBB has lost 8 percent over the past month, sparking fourth-quarter outflows of nearly $223 million. However, the ETF is heavier year-to-date as highlighted by inflows of over $581 million. IBB has over $9.6 billion in assets under management.

More Details

Nearly 82 percent of IBB's roster is classified as biotechnology, but the ETF features some token exposure to pharmaceuticals companies and life sciences firms. Those industry groups combine for almost 18 percent of the fund's weight.

Underscoring the often volatile nature of the biotechnology space, IBB has a three-year standard deviation of 23.7 percent, more than double the comparable metric found on the S&P 500.

IBB charges 0.47 percent per year, or $47 on a $10,000 investment.

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