The State Street SPDR S&P Biotech ETF (XBI) made its debut on 01/31/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is sponsored by State Street Investment Management. It has amassed assets over $9.75 billion, making it one of the largest ETFs in the Health Care ETFs. Before fees and expenses, XBI seeks to match the performance of the S&P Biotechnology Select Industry Index.

The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for XBI are 0.35%, which makes it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 0.39%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

XBI's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.

Taking into account individual holdings, Revolution Medicines Inc (RVMD) accounts for about 1.85% of the fund's total assets, followed by Twist Bioscience Corp (TWST) and Alkermes Plc (ALKS).

The top 10 holdings account for about 16.19% of total assets under management.

Performance and Risk

The ETF has added about 21.42% and it's up approximately 72.97% so far this year and in the past one year (as of 07/30/2026), respectively. XBI has traded between $85.16 and $164.28 during this last 52-week period.

The ETF has a beta of 0.82 and standard deviation of 27.05% for the trailing three-year period, making it a high risk choice in the space. With about 153 holdings, it effectively diversifies company-specific risk .

Alternatives

State Street SPDR S&P Biotech ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

First Trust NYSE Arca Biotechnology ETF (FBT) tracks NYSE Arca Biotechnology Index and the iShares Biotechnology ETF (IBB) tracks Nasdaq Biotechnology Index. First Trust NYSE Arca Biotechnology ETF has $2.85 billion in assets, iShares Biotechnology ETF has $9.39 billion. FBT has an expense ratio of 0.55% and IBB changes 0.44%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit

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State Street SPDR S&P Biotech ETF (XBI): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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