The 3 Best Biotech ETFs for Decades of Big Returns

The third major biotech ETF that’s out there is the SPDR S&P Biotech ETF (XBI, $131.35) – an «equal weight» offering from SPDR with more than $7 billion in assets at present. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Arm was fined around $13.6 million Friday for failing to protect the data of millions of British customers in a 2017 hack of the credit-reporting company. You see, the biotech sector fell 31% from July 2015 through February 2016. As the trading week commenced, the ARK Israel Innovative Technology ETF faced an immediate test, dropping by 5%, underscoring the heightened sensitivity of the fund to geopolitical events in the region.

Therefore, it’s an intriguing and low-cost candidate for the best biotech ETFs to buy. However, the $8.8 billion IBB takes it one step further compared to other biotech ETFs. IBB also includes many of the life sciences equipment and technology firms. During 2014, the Food and Drug Administration approved more molecular entities and biotech drugs than any other time in the last 15 years. Today seven of the top ten leading drugs in the world are biotechnology drugs. Deciding which healthcare ETF best fits your needs depends on what you’re looking for from the space.

  • Many small companies rely on grants to fund the development and clinical trials necessary to bring a new treatment to market.
  • However, one factor to consider for ARKG focuses on its expense ratio.
  • No matter what’s going on in the economy, scientists will continue pressing forward for medical innovations.
  • The top three holdings are BridgeBio Pharma (3.64%), Halozyme Therapeutics (2.34%) and Acadia Pharmaceuticals (2.30%).
  • That makes it a very popular and liquid way to trade biotech stocks in an exchange-traded fund.

While the iShares Nasdaq Biotechnology gives greater weight to biotechs with larger market caps, the SPDR S&P Biotech ETF maintains more equalized weights for all stocks. As a result, the ETF’s top holding, BioMarin Pharmaceutical, makes up only 1.72% of total assets held. Taking a different approach, the Invesco Dynamic Biotechnology & Genome ETF (PBE, $76.69) invests in a short list of roughly 30 companies, but picks and chooses biotech stocks based on qualitative criteria.

The 7 Best Biotech ETFs to Buy for Exposure to the Healthcare Sector

The Motley Fool owns shares of and recommends Alnylam Pharmaceuticals, Celgene, and Gilead Sciences. This «all your eggs in one basket» approach is certainly higher risk, but it has also resulted in significantly higher rewards this year. Consider that the prior XBI fund is actually down slightly on the year, while BBH is up an impressive 16.7%.

Marinus’ market cap was below $20 million at the beginning of the year. Rising interest rates and the possibility that banking regulations may ease gave financials some fuel. A couple of Argentine banks, loan marketplace LendingTree (TREE) and mobile payment company Square (SQ) were some of the samplings from this sector.

Last year, revenue totaled $10.8 billion and earnings per share were $13.85. There’s clearly a lot of risk in this biotech ETF because of the structural components behind its makeup, as well as its unique and focused strategy just on cancer-related therapies. But if you think this is the area where there’s the most potential, CNCR could be worth a look.

The fund’s lifetime returns are not the best, as it’s declined by an annualized rate of 11.56% over the past three years. This is a wait-and-see fund that can become promising if genomic sequencing takes off. GNOM has a 0.50% expense ratio, and its top three holdings are Pacific Biosciences of California (5.05%), Intellia Therapeutics (4.50%) and 10X Genomics Inc – Class A (4.42%). Exchange-traded funds (ETFs) make it easier for investors to diversify their portfolios and minimize market research. Instead of analyzing individual stocks, ETF investors monitor the fund’s holdings and performance.

Therefore, IBB makes an interesting case for the best biotech ETFs to buy. However, it’s also a volatile arena if you’re choosing individual stocks. While one company can deliver a knockout blow during its clinical trials, many others may fail miserably. To help mitigate the feast-or-famine nature of the underlying industry, the best biotech ETFs to buy offer a broad canvas of highly compelling enterprises. This way, you’re better assured of long-term profitability. The index will comb through U.S. listed biotech or pharmaceutical companies with one or more drugs in Phase II or Phase III FDA clinical trials.

The table below includes fund flow data for all U.S. listed Biotechnology ETFs. Total fund flow is the capital inflow into an ETF minus the capital outflow from the ETF for a particular time period. A fund’s historical performance offers no guarantees, but a fund with steady returns can be more reliable than a fund that has taken investors on a roller coaster.

More from InvestorPlace

With that, below are the best biotech stocks to buy for exposure to the healthcare sector. For really long-term investors, the biotech sector has always been about finding the next big drug or therapy. It’s about finding the biotech stocks that actually have a chance to succeed. The Vanguard healthcare ETF has very similar allocations across subsectors like pharma, biotech, and equipment. Vanguard’s cost advantage gives it a slight performance lead over its peers in the space. The past 18 months haven’t been very pleasant for biotech investors.

Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Biotech ETFs have all the characteristics of ETFs in general. 8 reasons why php is still so important for web development The key difference is that these ETFs hold only the stocks of companies that focus on biotechnology. Hundreds of biotech companies are hard at work developing innovative therapies.

Historical Performance Trends

Plus, you can only buy mutual funds through a brokerage or directly from the issuer. According to TipRanks, analysts peg AKRG as a consensus moderate buy. Moreover, their average price target stands at $50.37, implying over 74% growth potential. However, one factor to consider for ARKG focuses on its expense ratio. According to TipRanks, Wall Street analysts peg XBI as a consensus moderate buy. Further, their average price target stands at $143.11, implying 81% upside potential.

Biotechnology ETF List

The fund focuses on highly liquid companies that are industry leaders. The fund has delivered an annualized return of 8.90% over the past 10 years and has a 0.35% expense ratio. The fund’s top three holdings are Amgen (12.25%), Gilead Sciences (9.06%) and Vertex Pharmaceuticals (8.40%). Vertex’s financial results will improve in the medium term as it deepens and diversifies its pipeline.

ARK Genomic Revolution ETF (BATS:ARKG)

However, don’t be surprised if all of these biotech stocks — the three winners and the two honorable mentions — perform well next year. In June, the FDA granted orphan-drug designation to ganaxolone as a treatment for CDKL5 Disorder, a rare genetic type of epilepsy. Marinus announced top-line data from its phase 2 study of the drug in September. On Dec. 13, Marinus was added to the Nasdaq Biotechnology Index, which meant that several exchange-traded funds were buying the company’s shares. Celgene recently provided investors with a sneak peak at its fourth-quarter results that suggest that trend remains intact. Sales grew by 18% thanks to strong numbers from drugs such as Revlimid, Pomalyst/Imnovid, and Otezla.

Historically, that’s been the characteristic that best exemplifies Wall Street’s winners. In fact, Money Morning Director of Technology & Venture Capital Research Michael A. Robinson expects the lexatrade review entire biotech sector, including this ETF, to outperform the Dow because of four catalysts. We expect this pick to continue beating the market, which is why we are recommending it again today.

ETF issuers are ranked based on their AUM-weighted average 3-month return of their ETFs with exposure to Biotechnology. Funds with more assets can cover more ground and typically have lower expense ratios. Large funds with frequent trading activity are also easier to exit if you want to get out of the position. blackbull markets review Low-liquidity funds present fewer opportunities for an exit, and you may have to settle with a selling price well below the market price. Low liquidity also means you have to pay extra to buy shares. The VanEck Biotech ETF aims to mirror the performance of the MVIS U.S. Listed Biotech 25 Index (MVBBHTR).


Más de nuestro blog

Ver todos