The fund tracks the NYSE Arca Biotechnology Index and holds about 30 companies engaged in biopharmaceutical, genomic and gene therapy research, all at equal weight. Because it allocates evenly rather than by market capitalization, the performance of small- and mid-cap biotech companies is reflected with the same weight as that of large caps.

It suits investors who want to diversify across the biotech sector while avoiding concentration in a few large-cap names.

First Trust launched the ETF in 2006, and it is passively managed, tracking an index.

The fund allocates assets evenly across its 30 or so holdings and resets the weights through quarterly rebalancing. Its main holdings are companies in biopharmaceutical development, genomic research and gene therapy, and because of the equal-weight design, the performance of small- and mid-cap biotechs is reflected evenly without a tilt toward large caps.

• The equal-weight structure reflects the performance of small- and mid-cap biotech companies evenly
• Concentrated exposure to the specialized biopharmaceutical, genomic and gene therapy sector

Assets under management (AUM) stand at $3.0B, and the expense ratio is 0.55% per year.

Its fees are somewhat higher than those of IBB and XBI, but the equal-weight approach sets it apart: it lowers concentration in large caps such as AMGN and GILD while raising the weight of small- and mid-cap growth names such as ALNY and EXEL.

The biotech sector often sees sharp swings in individual stocks on clinical trial results and regulatory approval announcements. Because of the equal-weight structure, single-stock events can have a larger impact on the whole portfolio than in market-cap-weighted ETFs, and with a high share of growth stocks, volatility tends to stand out when interest rate conditions change.

Fund inflows tend to increase during periods of active new drug approval cycles. Expectations for innovative pipelines, rather than defensive demand for healthcare broadly, drive the flows, and a clinical failure can spread risk-off sentiment across the entire sector.

Its strengths are equal-weight diversification and concentrated biotech exposure; its weaknesses are high volatility and a somewhat high expense ratio.

Within the same sector ETF category, comparable funds include VFH (financials sector), VIS (industrials sector), IYF (financials), ONEQ (Nasdaq Composite) and FV (value factor), all of which differ in fees, AUM and strategy. For direct biotech comparisons, there is IBB, which is market-cap weighted, and XBI, which uses a broad equal-weight structure. IBB is centered on large caps such as AMGN, BIIB and GILD, while XBI has a more widely diversified structure. If you want leveraged exposure, consider BIB (2x leveraged); if you need a short-term opposing position, LABD (3x inverse); and if you prefer active management, ARKG.

These are the points to review before investing in FBT. An equal-weight biotech ETF has diversification as its strength, but sector concentration, clinical risk and fee levels are items to confirm before making an investment decision.

Because of its concentration in the single biotech sector, volatility is higher than in the broader market, and a clinical failure or regulatory decision involving an individual holding can affect the entire portfolio. With a high weight in small- and mid-cap companies due to the equal-weight structure, the fund is also exposed to the bankruptcy risk of emerging biotechs.

The structure suits investors who want to diversify across the biotech sector without large-cap bias. If fees are your priority, IBB and XBI are alternatives; if you want equal-weight diversification, FBT and XBI; and if you prefer active management, ARKG.