7 Top-Performing Biotech ETFs: Strategic Exposure to Healthcare Innovation

In an economic landscape marked by uncertainty, diversified investment vehicles have become increasingly attractive to fund managers and retail investors alike. Among the most compelling options are biotech ETFs, which provide systematic exposure to the healthcare sector without the idiosyncratic risks inherent in single-stock selection.

The healthcare industry possesses a fundamental advantage: demand for medical advancement never diminishes, regardless of macroeconomic conditions. This structural tailwind has made biotech ETFs particularly appealing for long-term portfolio positioning. While individual biotech companies face binary clinical trial outcomes—some delivering breakthrough results while others fail catastrophically—ETF structures distribute these risks across dozens of enterprises, creating a more balanced risk-reward profile.

Market Performance and Category Overview

The biotech ETF universe spans various strategies, from broad pharmaceutical exposure to specialized genomics-focused vehicles. Recent performance data reveals mixed outcomes: some funds have outpaced major benchmarks while others have underperformed, reflecting the sector’s inherent volatility. Yet evidence suggests that healthcare-related holdings can maintain support through market cycles, making them worthy of serious consideration.

Large-Cap Biotech Leaders: XBI and IBB

SPDR S&P Biotech ETF (XBI) stands as one of the sector’s most liquid options, commanding 20.8 million shares in average daily volume. With $6.42 billion in net assets, XBI provides diversified exposure across mid-to-large pharmaceutical names. Over the trailing year, XBI declined 4%, meaningfully outperforming the S&P 500’s 8% loss. The fund’s top holding, Madrigal Pharmaceuticals (MDGL), represents 3.39% of assets, followed by Natera (NTRA) at 1.52% and Acadia Pharmaceuticals (ACAD) at 1.5%. Wall Street consensus rates XBI as a moderate buy with a $143.11 average price target, suggesting 81% upside potential. Its lean 0.35% expense ratio undercuts the category average of 0.57%, making it an economical entry point.

iShares Biotechnology (IBB) commands significantly larger assets at $7.91 billion, supported by 2.8 million shares daily volume. This fund emphasizes mega-cap healthcare enterprises: Gilead Sciences (GILD) claims 8.09% of portfolio weight, Regeneron Pharmaceuticals (REGN) controls 7.89%, and Vertex Pharmaceuticals (VRTX) comprises 7.58%. Since the new year began, IBB has retreated 2%, though it gained nearly 5% over the past year. Analyst consensus favors moderate accumulation with a $173.08 price target, implying 36% appreciation potential. The 0.44% expense ratio remains competitive within the category.

Specialized Genomics Strategies: GNOM and ARKG

For investors focused on the burgeoning genomics sector, Global X Genomics and Biotechnology ETF (GNOM) offers concentrated exposure. Despite modest daily volume of 45,961 shares, GNOM has attracted dedicated specialists. Top positions include 10X Genomics (TXG) at 7.1% allocation, Sarepta Therapeutics (SRPT) at 5.52%, and Natera at 5.12%. The fund’s year-to-date decline of 2% conceals a steeper 9% retreat over twelve months, reflecting higher-risk positioning. GNOM maintains 89.9% U.S. domicile with modest European (9%) and Japanese exposure. TipRanks rates it a consensus moderate buy at $19.74, offering 61% upside. The 0.5% fee is middling by category standards.

ARK Genomic Revolution ETF (ARKG) operates as a higher-conviction vehicle with $1.89 billion in assets and 3.9 million daily shares traded. Year-to-date performance shows 5% gains, yet the trailing twelve months reveal a concerning 27% drawdown, underscoring its high-volatility profile. Exact Sciences (EXAS) anchors the portfolio at 11.71%, trailed by Pacific Biosciences (PACB) at 5.12% and Schrodinger (SDGR) at 5.04%. Geographic exposure extends beyond the U.S. into European, Canadian, and UK markets. Analysts project $50.37 fair value (74% upside), though the 0.75% expense ratio significantly exceeds category norms.

Niche Plays: IDNA, SBIO, and CNCR

iShares Genomics Immunology and Healthcare ETF (IDNA) targets a smaller asset base of $143.3 million with 24,123 daily shares. Notably down 26% over the past year, IDNA blends established players with emerging innovators. Regeneron leads at 4.92%, followed by Exelixis (EXEL) at 4.85%, and Blueprint Medicines (BPMC) at 4.34%. Geographic diversification is substantial: only 61.4% of holdings originate from the U.S., compared to higher concentrations in peer funds. The 0.47% expense ratio pairs with analyst consensus favoring $40.94 fair value (74% upside potential).

ALPS Medical Breakthroughs ETF (SBIO) takes a different approach by targeting small-and-mid-cap firms with drugs in Phase II or Phase III FDA trials. This specialization amplifies volatility but offers concentrated exposure to near-term catalysts. Performance proved resilient: SBIO declined just 8% over twelve months, matching S&P 500 weakness precisely. Leading positions include Roivant Sciences (ROIV) at 3.85%, Prometheus Biosciences (RXDX) at 3.36%, and Alkermes (ALKS) at 2.96%. At $54.62 consensus price target, the fund implies 92% appreciation potential. The 0.5% expense ratio sits favorably relative to peers.

Loncar Cancer Immunotherapy ETF (CNCR) pursues an ultra-specialized mandate, holding approximately 30 stocks focused on immunotherapy-based cancer treatments. Since January, CNCR shed 8% but maintains geographic diversity with 71.6% U.S. weighting. RAPT Therapeutics (RAPT) commands 6.23%, Merus (MRUS) holds 5.63%, and Janux Therapeutics (JANX) comprises 4.3%. Wall Street consensus reaches $24.30 (implying 93% upside), yet the elevated 0.79% expense ratio reflects the fund’s specialized positioning.

Selection Framework for Biotech ETF Investors

Choosing among these biotech ETFs requires assessing personal risk tolerance and market outlook. Large-cap vehicles like XBI and IBB suit conservative allocators seeking stable diversification. Specialized genomics funds (GNOM, ARKG) appeal to conviction-driven investors with sector expertise. Niche strategies (IDNA, SBIO, CNCR) provide concentrated exposure to specific investment theses but demand higher risk tolerance. Expense ratios matter over extended holding periods, making low-cost leaders like XBI particularly attractive for buy-and-hold approaches.

The biotech ETF sector remains compelling for investors prioritizing long-term healthcare exposure. As scientific advancement continues reshaping medicine, these funds offer a systematized pathway to participate in transformative innovation while managing downside volatility through diversification.