The global biotechnology market will grow to more than $727 billion by 2025, according to a report by Grand View Research, up from about $370 billion in 2016. Rising demand for healthcare products and services will be driven by a growing and aging global population, as well as by game-changing technological advancements in areas such as regenerative medicine and genetic diagnostics.

Biotechnology stocks give investors an opportunity to profit from this megatrend. Yet while they offer the prospect of explosive gains, many biotech stocks also tend to be highly volatile. Additionally, it can be challenging to pick the winners and the losers, as they're often determined by difficult-to-predict clinical trials. Most people investing for retirement, therefore, might be best served by a biotech exchange-traded fund, which can help you profit from the overall growth of the biotechnology industry in a less volatile manner, and without the need to pick and choose individual stocks.

In this regard, two biotech ETFs -- the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEMKT:XBI) -- stand out among the rest as particularly strong investment options. Read on to learn more about them.

Three rising stacks of gold coins with dice spelling ETF on top of them

Image source: Getty Images.

The big dog

The iShares Nasdaq Biotechnology ETF is the largest biotech ETF, with assets under management of approximately $8.7 billion. The fund holds positions in more than 190 companies. It's market cap-weighted, and its top 10 holdings -- which include large-cap businesses like Biogen, Amgen, and Celgene -- account for more than 50% of the ETF's assets. 

With this allocation structure, the iShares Nasdaq Biotechnology ETF's performance will largely be driven by the returns of the industry's biggest players. These companies' more diverse revenue streams and stronger balance sheets help to reduce the fund's overall risk profile compared to ETFs with larger allocations in smaller businesses.

Moreover, the fund's expense ratio is reasonable at 0.47% annually. That's about $47 per $10,000 invested per year. In turn, the iShares Nasdaq Biotechnology ETF gives retirement-focused investors a relatively low-risk and low-cost way to profit from the surging growth of the biotech industry.

Smaller companies, potentially bigger rewards

The SPDR S&P Biotech ETF is the industry's second-largest fund, with more than $5 billion in assets under management. Like the iShares ETF, this exchange-traded fund provides investors with access to a broad swath of biotechnology-focused companies. The ETF currently holds positions in 115 businesses. 

Yet unlike the iShares ETF, the SPDR S&P Biotech ETF is equally weighted, and therefore its results will be impacted more by smaller companies than its market cap-weighted peer; nine out of the SPDR ETF's top 10 holdings are small- and mid-cap companies. The fund is also more broadly diversified in terms of position sizing; its 10 largest holdings together account for less than 20% of its assets, compared to about 52% for the iShares ETF.

With its greater exposure to faster-growing companies, the SPDR S&P Biotech ETF offers the prospect of even higher returns than the iShares ETF. And with its greater position-weighting diversification helping to offset the inherently higher risk of these smaller and typically younger companies, the SPDR ETF's risk profile is arguably only moderately higher than that of the iShares ETF.

The SPDR S&P Biotech ETF's expanse ratio is also significantly lower than its larger rival, at 0.35% annually. Thus, it offers investors an even lower-cost way to build retirement wealth by capturing a share of the biotech industry's rapidly growing profits.

Which of these ETFs is best for me?

All told, the iShares Nasdaq Biotechnology ETF and the SPDR S&P Biotech ETF are two great ways to profit from biotechnology's tremendous potential. Investors closer to retirement may appreciate the iShares ETF's greater focus on larger and more stable businesses, while investors with more time until retirement may find the SPDR ETF's more aggressive growth profile more to their liking. Ultimately, of course, the choice is yours. Either way, if you choose to invest in one (or both) of these ETFs, chances are, you could be well-rewarded in the years ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.