Unlike the billion-dollar pharmaceutical giants, biotech firms offer the potential for big payoffs. It’s not unusual for a small or mid-sized biotech stock to fluctuate 10%, 20%, 30% or more in a single day after announcing the approval or disapproval of one of its drugs. Biotechnology ETFs offer a way to share in the success of those companies that succeed and limit losses on those that fail.

SPDR’s S&P Biotech (XBI) tracks the S&P Biotechnology Select Industry Index, and holds 27 positions. The fund’s top holding is Dendreon Corp at 4.3% of the portfolio. XBI charges an expense ratio of 0.35% and trades just under 250,000 shares on average. Similar to XBI, PowerShares’ Dynamic Biotech & Genome fund (PBE) holds 30 stocks. The fund charges an expense ratio of 0.63% and has done well for the year, with a return of 25.4%.