What this ETF is trying to do

The Invesco Biotechnology & Genome ETF (ticker: PBE) is an exchange-traded fund that focuses on the biotechnology and genome sectors. This means it holds a collection of different companies involved in advanced medical science. Based on its top holdings, the fund includes companies like Natera Inc, Illumina Inc, and Biogen Inc. Because this is a partial list, there are other companies in the fund as well.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price and any cash distributions (dividends) paid out to investors.

For PBE, the numbers show growth over different time periods:

• Year-to-Date (YTD): The price return is approximately 15.27%, while the total return is approximately 16.52%.

• One Year: The price return was approximately 30.50%, and the total return was approximately 32.58%.

• Three Years: The price return was approximately 66.52%, and the total return was approximately 70.26%.

To give you an idea of price movement, the current price is $94.70. The estimated price from roughly one year ago was approximately $72.56.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. PBE has a distribution yield of approximately 1.41%. This number describes the cash distributions relative to the ETF's price. These distributions usually happen quarterly, and there were 4 payments in the last 12 months. While these payments provide cash income, they are not the same as total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of an ETF's underlying assets decreases significantly. It is important to note that a falling share price does not always mean NAV erosion is happening.

For this ETF, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this fund.

Pros

• Strong Price Growth: The ETF has shown significant price returns over the last year and three years.

• Positive Total Returns: The total return figures are higher than the price return figures, meaning distributions have added value to the overall performance.

• Low Erosion Risk: The data shows no detected price erosion.

Cons

• Sector Focus: Because this ETF focuses on biotechnology and genomes, its performance is tied to that specific industry.

• Lower Yield: The distribution yield of 1.41% may be considered low for investors specifically looking for high levels of immediate cash income.

Beginner takeaway

PBE is an ETF that tracks companies in the biotech and genome space. It has experienced significant growth in both its share price and its total return over the last three years. While it does pay out small distributions, most of its recent performance has come from the increase in the share price itself. Always remember that high yields can sometimes be misleading, so it is helpful to look at both price return and total return together.