Jake Lerch, The Motley Fool

Sun, July 12, 2026 at 3:50 PM EDT 6 min read

Comparing First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) and iShares Biotechnology ETF (NASDAQ:IBB) reveals a choice between FBT's highly concentrated portfolio and IBB's broader, market-cap-weighted industry exposure.

Both funds target the volatile U.S. biotechnology sector, yet they differ significantly in construction and underlying philosophy. While the iShares fund tracks a wide basket of established and emerging firms, the First Trust fund focuses on a tight group of 30 stocks. This structural difference means investors must choose between broad industry representation and a more concentrated strategy that may deviate significantly from the broader sector's performance. The iShares fund is significantly larger with $9.6 billion in assets under management (AUM), while the First Trust fund manages $2.9 billion in AUM, offering different levels of liquidity for active traders.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The iShares fund is the more affordable entry point for investors, carrying an expense ratio of 0.44% compared to 0.55% for the First Trust fund. This 11-basis-point difference can impact long-term total returns, particularly in the high-growth biotechnology sector.

Performance & risk comparison

What's inside

The First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) offers concentrated exposure to the healthcare sector, which accounts for 100% of its portfolio. It focuses on price movements and income generated by the NYSE Arca Biotechnology Index through a methodology covering just 30 positions. This high degree of concentration can lead to higher idiosyncratic risk compared to broader market benchmarks. Its largest positions include Corcept Therapeutics (NASDAQ:CORT) at 5.84%, NeoGenomics (NASDAQ:NEO) at 4.88%, and Veracyte (NASDAQ:VCYT) at 4.76%. The fund was launched in 2006.

The iShares Biotechnology ETF (NASDAQ:IBB) also focuses entirely on the healthcare sector but provides much broader diversification with 248 holdings. Because it mirrors an index of publicly traded U.S. biotechnology stocks using a market-cap-weighted approach, its performance is more heavily influenced by the industry's largest and most established players. This diversification may help smooth out some of the volatility inherent in the biotech space. Its largest positions include Vertex Pharmaceuticals (NASDAQ:VRTX) at 7.84%, Amgen (NASDAQ:AMGN) at 7.69%, and Gilead Sciences (NASDAQ:GILD) at 7.11%. This fund was launched in 2001.