The iShares Biotechnology ETF (IBB) is one of the oldest and most liquid biotech funds on the market. It tracks the ICE Biotechnology Index, giving investors exposure to over 200 US listed companies. The fund utilizes a modified market cap strategy to provide concentrated exposure to established leaders like Amgen and Vertex, while maintaining access to the clinical breakthroughs and M&A activity of smaller firms.
However, for long-term Indian investors, IBB carries a critical structural risk: The US Estate Tax. If you hold US-domiciled assets (like IBB) and your portfolio value exceeds $60,000, the US government levies a 40% Estate Tax on the excess amount upon your death. This creates an unnecessary risk that can wipe out nearly half of the wealth intended for your heirs.
This blog gives you all the information you need about the top UCITS alternatives. While IBB recently changed its benchmark, some of the alternatives listed below track the Nasdaq Biotechnology Index, providing the exact same exposure to core US biotech heavyweights. Other alternatives offer a broader, globally diversified approach to healthcare and medical innovation, allowing you to capture the growth of the industry without the risk of the US Estate Tax.
Table of Contents
Why Indians are looking for UCITS alternatives to IBB
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like IBB while providing similar and highly targeted exposure.
- Estate Tax Protection: UCITS funds are typically domiciled in Ireland. They are not considered "US-situs" assets, meaning they are 100% exempt from the 40% US Estate Tax.
- Tax Deferral (Accumulation): Unlike IBB, which forces taxable cash dividends on you, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This reduces your tax liability in India and defers it until you sell the fund.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS Alternatives for IBB
Here are the top four UCITS funds that serve as the best proxies for US Biotech and broader healthcare innovation.
1. iShares Nasdaq US Biotechnology UCITS ETF
This is the closest official European twin to IBB, managed by the exact same provider (BlackRock/iShares). While IBB recently switched its benchmark to the ICE Biotechnology Index in 2021, BTEC continues to track the Nasdaq Biotechnology Index, which was IBB's original index for over 20 years.
It captures the exact same core US biotech and pharmaceutical heavyweights. Being an Ireland-domiciled, Accumulating (Acc) fund, it automatically reinvests any dividends, shielding you from dividend tax drag and compounding your returns efficiently over time.
- Ticker: BTEC (LSE)
- Total Expense Ratio (TER): 0.35%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Amgen, Vertex Pharmaceuticals, Gilead Sciences, Regeneron Pharmaceuticals, AstraZeneca.
2. Invesco Nasdaq Biotech UCITS ETF
SBIO also tracks the Nasdaq Biotechnology Index, giving you identical exposure to the US biotech sector as BTEC. However, Invesco uses a synthetic (swap-based) structure to track the index.
Under US tax law, this structure often allows the fund to completely bypass the 15% to 30% dividend withholding tax that physical funds face. While biotech companies are not typically high-dividend payers, this structure still provides incredibly tight tracking and slight internal compounding advantages.
- Ticker: SBIO (LSE)
- Total Expense Ratio (TER): 0.40%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Amgen, Vertex Pharmaceuticals, Gilead Sciences, Regeneron Pharmaceuticals, AstraZeneca.
3. iShares Healthcare Innovation UCITS ETF
Pure US biotechnology can be an incredibly volatile and concentrated sector. If you want exposure to medical breakthroughs but prefer a wider safety net, HEAL is a fantastic alternative.
It tracks the iSTOXX FactSet Breakthrough Healthcare Index, focusing on global companies pushing the boundaries of medical treatment and technology. Instead of just traditional US biotech, this includes global genomics, cutting-edge medical devices, and global innovative pharma.
- Ticker: HEAL (LSE)
- Total Expense Ratio (TER): 0.40%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Eli Lilly, Intuitive Surgical, United Therapeutics, Stryker Corp, Boston Scientific.
4. Xtrackers MSCI World Health Care UCITS ETF
IBB is highly concentrated and prone to massive swings based on FDA trial approvals and interest rates. If you want a smoother ride while still capturing the growth of the medical sector, XDWH serves as a lower-cost, much less volatile core healthcare alternative.
It tracks the entire healthcare industry across global developed markets. It balances the high-risk biotech players with massive, cash-flowing pharmaceutical giants, healthcare providers, and equipment manufacturers. It is accumulating and heavily diversified across over 130 global companies.
- Ticker: XDWH (LSE)
- Total Expense Ratio (TER): 0.25%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Eli Lilly, UnitedHealth Group, Novo Nordisk, Johnson & Johnson, Merck & Co.
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian investors. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US ETFs like the IBB; you can also buy tax-efficient UCITS equivalents using Paasa.
The Compliance Advantage
Paasa makes global investing easy and also removes the compliance friction with a specialized layer built specifically for Indian residents:
- Schedule FA Reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: Guidance on FEMA regulations and LRS limits to ensure compliance.
Whether you are buying direct US stocks or investing in UCITS ETFs listed on European exchanges, Paasa provides global access with India-specific compliance and tax support.
