BIB, BIS: New Biotech 2x ProShares

April 9, 2010 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

If the biotechnology sector is just not wild enough for you, today is your lucky day.  ProShares is now offering two new ETFs covering this sector with 2x daily leverage, either long or short.  The new funds that began trading on 4/8/10 are:

  • ProShares Ultra Nasdaq Biotechnology (BIB) (overview)
  • ProShares UltraShort Nasdaq Biotechnology (BIS) (overview)

Both are based on the Nasdaq Biotechnology Index, which was previously accessible in ETF format – without added leverage – only via iShares Nasdaq Biotechnology (IBB).  Top holdings in the index include Amgen (AMGN) 10.1%, Teva Pharmaceuticals (TEVA) 7.9%, Gilead Sciences (GILD) 7.6%, Celgene (CELG) 6.3%, and Vertex Pharmaceuticals (VRTX) 4.6%.

The biotechnology sector has a history of wild swings.  One reason for this is that it is highly subject to political influence.  The sector tumbled in March 2000 when the Clinton Administration placed human genome research data in the public domain.  Political decisions can help, too: Biotech investors seem pleased with recent reforms in U.S. health care policy.

BIB and BIS offer short-term traders new ways to trade the biotechnology sector in both directions.  As with all leveraged ETFs, they should be used with caution and are generally not suitable for long-term investments.  Due to daily leverage reset, results over periods longer than one day may be more or less than 2x the underlying index.

Both funds are expected to have annual expense ratios of 0.95%.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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