How to Invest in iShares Biotechnology ETF (IBB)

The iShares Biotechnology ETF (IBB 1.43%) gives investors a way to take a focused position within the healthcare sector by targeting the most innovative biotechnology companies — but these companies come with significant risk.

Biotech companies develop and commercialize treatments like gene therapies, cancer drugs, and vaccines. These breakthroughs can be transformative, but investing in individual biotech stocks is notoriously risky.

Companies spend years burning cash through Phase 1, 2, and 3 clinical trials, and their fate often hinges on a single make-or-break FDA approval.

If your goal is less about picking the next moonshot and more about gaining broad exposure to the long-term growth of the biotech industry, an ETF like IBB can be an appealing option. Here’s what you need to know before investing as a beginner.

What is iShares Biotechnology ETF (IBB)?

What is iShares Biotechnology ETF (IBB)?

The iShares Biotechnology ETF (IBB) is a passive fund, meaning it doesn’t actively pick stocks. Instead, it seeks to replicate the performance of a benchmark. The fund tracks the NYSE Biotechnology index, a broad market-cap-weighted index of 251 U.S.-listed biotech companies.

Market-cap weighting means larger companies — measured by share price multiplied by shares outstanding — carry proportionally greater influence in the index.

The fund is also one of iShares’ older ETFs, launched in February 2001. It has grown to more than $5.7 billion in assets under management (AUM). The fund is highly liquid, with a 30-day median bid-ask spread of 0.01%, which represents the difference between the average buying and selling price over that period.

How to buy

How to buy iShares Biotechnology ETF (IBB)

1. Open your brokerage account: Log in to your brokerage account where you handle your investments.
2. Search for the ETF: Enter the ticker (IBB) or ETF name into the search bar to bring up the ETF’s trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Holdings

Holdings of iShares Biotechnology ETF (IBB)

The iShares Biotechnology ETF is a broad fund with 251 holdings, though as noted earlier, it’s dominated by larger biotech stocks due to its market-cap weighting. The portfolio is primarily biotech companies, but it also includes a meaningful 15.45% allocation to life sciences tools and services firms. These differ from traditional biotech in that they sell the equipment and services used in research and development, but they remain tied to the same industry growth drivers. There’s also a small 2.74% allocation to pharmaceutical companies that, by business model, might qualify as biotech but are classified differently under sector rules.

Despite biotech’s reputation for volatility, this sector ETF is less volatile than the market overall, with a beta of 0.8 and a 17% standard deviation. That’s because the fund is anchored by large-cap biotech giants with stronger balance sheets and more established revenue streams, which helps smooth out risk.

The top holdings as of September 2025 include:

1. Gilead Sciences (GILD -1.32%): 7.31%
2. Amgen (AMGN 3.02%): 6.70%
3. Regeneron Pharmaceuticals (REGN 0.27%): 6.17%
4. Vertex Pharmaceuticals (VRTX -0.92%): 6.14%
5. Alnylam Pharmaceuticals (ALNY 1.9%): 6.10%
6. Iqvia Holdings (IQV 5.1%): 3.41%
7. Insmed (INSM 1.67%): 3.14%
8. Argenx (ARGX 2.48%): 3.07%
9. Mettler-Toledo (MTD 3.04%): 2.77%
10. Natera (NTRA -1.16%): 2.35%

Should I invest?

Should I invest in iShares Biotechnology ETF (IBB)?

If you’re a beginner interested in biotech, IBB is an ideal entry point. As noted earlier, it has a solid foundation built on high allocations to the big four — Gilead, Amgen, Vertex, and Regeneron — all of which have strong balance sheets and a track record of acquiring promising small caps to expand their pipelines.

This makes iShares Biotechnology ETF a good option if you believe that the biotech industry as a whole will continue to innovate, grow, and return capital. The trade-off is that you’ll miss out on the massive gains a smaller player can deliver if its trial succeeds, but you get lower volatility in exchange.

Dividend

Does iShares Biotechnology ETF (IBB) pay a dividend?

Right now, iShares Biotechnology ETF does not pay a dividend and has a 30-day SEC yield of 0%. IBB has historically paid small, irregular quarterly distributions, but investors shouldn’t rely on it for dividend income.

With the exception of a handful of large players, most biotech companies don’t have the capacity to pay dividends because their business model involves burning cash and raising capital until a breakthrough drug is commercialized. Even those selling treatments often prefer to reinvest in research and development rather than pay shareholders.

Expense ratio

What is iShares Biotechnology ETF (IBB)’s expense ratio?

The ETF’s expense ratio is 0.44%, or about $44 annually for every $10,000 invested. That’s fairly typical for an industry-specific fund.

Historical performance

Historical performance of iShares Biotechnology ETF (IBB)

The chart below shows the annualized total return of this iShares ETF.

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The bottom line

The bottom line on iShares Biotechnology ETF (IBB)

The iShares Biotechnology ETF is a straightforward way to invest in biotech without trying to pick winners among highly volatile individual stocks. It anchors itself in established leaders like Gilead, Amgen, Vertex, and Regeneron, which gives the fund stability and reduces the binary risk smaller biotech firms face. That makes it well-suited for investors who want exposure to the sector’s long-term growth without betting on single trial outcomes.

On the downside, you sacrifice the chance to capture explosive gains from small-cap breakthroughs, and the dividend profile is unreliable at best, or absent at worst.

For most long-term investors, IBB works best as a diversified, lower-risk way to express confidence in the biotech industry as a whole, rather than as a core holding.