Invesco unveils low cost biotech and semiconductor ETFs on Nasdaq

Jun 14th, 2021 | By | Category: Equities

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Invesco has launched a pair of ETFs targeting the biotechnology and semiconductor investment themes at price tags that are considerably lower than well-established rival products.

Invesco unveils lowest-cost biotech and semiconductor ETFs on Nasdaq

Anna Paglia, Global Head of ETFs and Indexed Strategies at Invesco.

The Invesco Nasdaq Biotechnology ETF (IBBQ US) and Invesco PHLX Semiconductor ETF (SOXQ US) have listed on the Nasdaq Stock Market with an expense ratio of just 0.19% which Invesco has agreed to waive for the first six months.

Each fund is linked to a seasoned index with a track record spanning more than two decades.

Anna Paglia, Global Head of ETFs & Indexed Strategies at Invesco, said: “We are excited to expand our relationship with Nasdaq in order to offer investors another way to access innovative companies currently shaping the way we live and work.

“There has never been a more relevant moment for these two themes, and we are happy that we could ensure investors now have the most cost-effective way to invest in Nasdaq-listed companies through indexes that have been live for almost three decades.

“Adding these two ETFs bolsters our already robust offerings in the technology sector and thematic industries within that sector. Invesco continues to expand its ETF offerings to provide clients with the ability to select the exposures to help them produce the best outcomes.”

Lauren Dillard, Executive Vice President and Head of Investment Intelligence for Nasdaq, added: “Nasdaq is proud to be the exchange partner to a global community of healthcare and semiconductor leaders. Leveraging our rules-based and transparent indexes, we are pleased to build on our partnership with Invesco, bringing investment products that enable investors to gain meaningful exposure to the pioneering companies who are transforming tomorrow.”

Biotechnology

The Invesco Nasdaq Biotechnology ETF tracks the Nasdaq Biotechnology Index which provides exposure to over 270 companies listed on the Nasdaq that are classified to the biotechnology subsector according to the Industry Classification Benchmark (ICB).

The index includes companies that were crucial to the development of Covid-19 vaccines and treatments, as well as firms specializing in a variety of biotechnology segments such as genomics, bioinformatics, wellness, and advanced medical therapeutics.

Constituents are weighted according to a modified market capitalization weighting scheme that caps the largest five companies at 8%. Notable positions currently include Amgen (8.4%), Moderna (6.9%), Gilead Sciences (6.8%), Illumina (5.2%), and Biogen (4.8%).

Invesco will be hoping the fund’s low expense ratio helps it to compete against two well-established biotechnology ETFs offered by BlackRock and State Street Global Advisors.

The iShares Biotechnology ETF (IBB US) is the largest with $11.1 billion in assets under management. It also tracks the Nasdaq Biotechnology Index and comes with an expense ratio of 0.46%.

The $7.3bn SPDR S&P Biotech ETF (XBI US), meanwhile, used to be the cheapest to target the biotechnology sector with an expense ratio of 0.35%. This fund is linked to the S&P Biotechnology Select Industry Index.

Semiconductors

The Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index which consists of the 30 largest US-listed companies classified to the semiconductor subsector according to the ICB.

Constituents are weighted by market capitalization while capping the weight of the five largest stocks at 8% and the weight of any other stock at 4%. Notable positions currently include Texas Instruments (8.6%), Intel (8.3%), Broadcom (7.8%), Qualcomm (7.7%), and Nvidia (7.7%).

BlackRock also offers the largest ETF targeting the semiconductor space – the iShares PHLX Semiconductor ETF (SOXX US), which is linked to the same index as above, houses $6.6bn in assets, and comes with an expense ratio of 0.46%.

The cheapest semiconductor ETF was previously the $5.5bn VanEck Vectors Semiconductor ETF (SMH US) which tracks the MVIS US Listed Semiconductor 25 Index and costs 0.35%.

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