BlackRock launches iShares US Biotechnology ETF

Nov 29th, 2017 | By | Category: Equities

BlackRock has launched the iShares Nasdaq US Biotechnology UCITS ETF (BTEK LN) on London Stock Exchange (LSE) and Deutsche Börse, providing exposure to biotechnology and pharmaceutical companies listed in the US.

BlackRock launches iShares US Biotechnology ETF BTEC LN

The Nasdaq Biotechnology Index has returned 18.1% year-to-date.

The fund tracks the Nasdaq Biotechnology Index which provides exposure to firms listed on Nasdaq Exchange that operate primarily in the biotechnology space as determined by the Industry Classification Benchmark. Eligible companies must have a market capitalization greater than $200 million and have an average daily trading volume of at least 100,000 shares.

Constituents are weighted according to a modified market capitalization weighting scheme that caps an individual security at 8% and limits the number of constituents to reach this cap to five. The fund currently has 159 holdings of which the largest are Biogen (8.4%), Amgen (8.3%), Gilead Sciences (7.5%), Celgene (6.5%) and Regeneron Pharmaceuticals (6.2%).

The ETF’s total expense ratio (TER) is 0.35%. The fund is available to trade on Deutsche Börse in euros (ticker: 2B70 GR) and on LSE in pounds sterling (ticker: BTEK LN) and US dollars (ticker: BTEC LN).

BlackRock offers a US-listed version of the fund – the iShares Nasdaq Biotechnology ETF (IBB US) – which trades on Nasdaq and has been around since February 2001. IBB contains over $9.8 billion in assets under management and has a TER of 0.47%.

The US biotechnology sector has performed strongly thus far in 2017, with the fund’s underlying index rising 18.1%, slightly above the 16.0% returned by the S&P 500 over the same period. Possible catalysts for the sector’s outperformance over the year include positive results in late-stage clinical trials, signs of renewed merger & acquisition activity in the sector, and increased probability of supportive tax changes.

The strong performance in the sector led European ETF provider Source to announce in June that its Source Nasdaq Biotech UCITS ETF (SBIO LN) was seeing record inflows (See: “Source reports record flows into biotech ETF”). SBIO tracks the same index as the new iShares product, and currently has $430m in AUM and a TER of 0.40%.

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