Better Biotechnology ETF: First Trust FBT vs. VanEck BBH
Key Points
The First Trust NYSE Arca Biotechnology Index Fund has outperformed the VanEck Biotech ETF on a one-year basis and over the last five years.
The VanEck Biotech ETF offers a lower expense ratio of 0.35% compared to 0.55% for the First Trust fund.
The VanEck Biotech ETF is more concentrated with 25 holdings, while the First Trust fund holds 30 companies and maintains a larger asset base.
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The First Trust NYSE Arca Biotechnology Index Fund (NYSEMKT:FBT) offers broader exposure and higher recent returns, while the VanEck Biotech ETF (NASDAQ:BBH) provides a lower-cost, highly concentrated portfolio of industry giants.
Biotechnology is a high-stakes corner of the healthcare market, characterized by immense research costs and binary regulatory outcomes. With $2.9 billion in assets under management (AUM), the First Trust fund is significantly larger than the VanEck fund. Both ETFs provide diversified access to companies that may be too risky to own individually.
Snapshot (cost & size)
| Metric | BBH | FBT |
|---|---|---|
| Issuer | VanEck | First Trust |
| Share price | $240.53 (as of 2026-10-05) | $270.93 (as of 2026-10-05) |
| Expense ratio | 0.35% | 0.55% |
| 1-yr return (as of 2026-10-05) | 48.35% | 51.52% |
| Dividend yield | 0.4% | n/a |
| Beta | 0.55 | 0.69 |
| AUM | $487.7 million | $2.9 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The VanEck fund is the more affordable option, charging 0.35% annually. The First Trust fund carries a higher expense ratio of 0.55%, a 20-basis-point difference that could impact long-term compounding for cost-sensitive investors.
Performance & risk comparison
| Metric | BBH | FBT |
|---|---|---|
| Max drawdown (5 yr) | -39.9% | -33.3% |
| Growth of $1,000 over 5 years (total return) | $1,253 | $1,684 |
What's inside
The First Trust NYSE Arca Biotechnology Index Fund allocates 100% of its assets to the healthcare sector, using an equal dollar-weighted approach that results in less concentration among the largest companies. It holds 30 positions, and its largest positions include Natera (NASDAQ:NTRA) at 4.74%, Halozyme Therapeutics (NASDAQ:HALO) at 4.49%, and Illumina (NASDAQ:ILMN) at 4.47%. It was launched in 2006.
The VanEck Biotech ETF also maintains 100% healthcare exposure but follows a more top-heavy index of 25 companies. Its largest positions include Amgen (NASDAQ:AMGN) at 15.53%, Gilead Sciences (NASDAQ:GILD) at 13.18%, and Vertex Pharmaceuticals (NASDAQ:VRTX) at 8.17%. It was launched in 2011.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
An exchange-traded fund is a great means of investing in the biotechnology industry, giving you efficient exposure to a range of companies. Two to consider are the First Trust NYSE Arca Biotechnology Index Fund (FBT) and VanEck Biotech ETF (BBH). Deciding between them is not easy, since they boast different pros and cons. The choice comes down to the factors that are most important to you.
FBT is better for active traders, since its far larger AUM of $2.9 billion delivers superior liquidity. This is further validated by its average volume of 76,885 compared to BBH's 9,212. Its equal-weighted approach contributes to FBT's popularity. A major clinical breakthrough in a smaller or mid-cap company has a more meaningful positive impact on the fund's overall performance.
BBH is for income-oriented investors, as it pays a dividend and sports a lower expense ratio. Its performance is highly dependent on its largest holdings, which adds a measure of stability since these are established industry giants. But if you already own these stocks or prefer the risk to be more spread out, FBT may be the better choice.
Personally, I would pick FBT because the biotech sector is a high-reward, high-risk industry, so a dividend is not as key a factor as overall fund performance. For that, FBT has delivered the better one-year and five-year returns.
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Robert Izquierdo has positions in Amgen. The Motley Fool has positions in and recommends Amgen, Gilead Sciences, Illumina, Natera, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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