Why Is PBE’s Fund Inflow Lower than PJP’s?


The PowerShares Dynamic Biotechnology & Genome Portfolio ETF (PBE) seeks to follow the market movement of the Dynamic Biotech & Genome Intellidex Index. The index provider selects high-performing biotechnology stocks using a fundamentally based multifactor model. Similar to PBE, the PowerShares Dynamic Pharmaceuticals ETF (PJP) is a smart beta fund that seeks to track the Dynamic Pharmaceutical Intellidex Index. The index provider selects stocks that are engaged principally in the research, development, manufacturing, sale, or distribution of pharmaceuticals and drugs of all types.

Why Is PBE’s Fund Inflow Lower than PJP’s?

Negative inflows in 2015

In comparison to PBE, PJP has had a relatively healthy fund inflow since 2012. PBE’s biotechnology portfolio has had a very volatile run in the market since inception, which has affected its demand in the market. Due to PBE’s flat performance in the current year, it has experienced fund outflow, or negative fund inflow. Also, PBE’s volume of shares traded per day has seen a considerable decrease this year.

Portfolio comparison

PBE’s top holdings include biotechnology stocks such as Regeneron Pharmaceuticals (REGN), Incyte (INCY), and Vertex Pharmaceuticals (VRTX). PJP, on the other hand, has Bristol-Myers Squibb (BMY), Pfizer (PFE), and Merck & Co. (MRK) among its top holdings. PBE’s top ten holdings represent 49.2% of its portfolio, whereas PJP’s top ten holdings form 52.0% of its portfolio. Both PBE and PJP were launched by PowerShares on June 23, 2005, to cover the healthcare sector. A detailed analysis of PBE’s subsectors follows in the next part of this series.