These stocks won’t stay down for long.
The past few months have been absolutely miserable for biotechnology stocks, with major biotech indices registering losses of 35 to 45 percent since July. However, biotech stocks still have a wealth of upside potential to offer, which makes sense considering that they’re involved in the science of bettering and lengthening human life, and humans … well, we tend to enjoy long, happy lives. Here are nine biotech exchange-traded funds that will let you play the space from a number of angles.
iShares Nasdaq Biotechnology ETF (ticker: IBB)
The IBB is the market’s largest biotech ETF by assets at $5.7 billion under management. Despite holding 190 stocks, the lion’s share of IBB is held among five stocks — Celgene Corp. (CELG), Biogen (BIIB), Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN), which combined make up 44 percent of the entire fund. While this provides exposure to many biotech stocks, the top-heavy IBB is more a play the “big five,” as well as general bullishness on the whole sector.
Expenses: 0.48 percent, or $48 annually per $10,000 invested.
SPDR S&P Biotech ETF (XBI)
The XBI is an “equal-weight” fund, in which all stocks regardless of size are weighted equally as of each rebalancing — though the weight naturally changes depending on whether the stock gains or loses until the next rebalancing. So, larger biotechs such as AMGN and CELG have less impact on XBI than IBB, while smaller companies like AMAG Pharmaceuticals (AMAG) hold more sway. Thus, XBI is a way to better leverage the huge single-stock jumps you get from smaller biotech companies’ successful trials and FDA approvals.
Expenses: 0.35 percent
First Trust NYSE Arca Biotechnology Index Fund (FBT)
From its inception in September 2006, the FBT has actually outperformed both of its more popular competitors with roughly 330 percent in total returns, compared to 275 percent for IBB and 250 percent for XBI. That kind of outperformance merits a mention here. But investors should note that this equal-weight fund holds just 30 stocks — including Spanish outfit Grifols, S.A. (GRFS) and biotech equipment maker Bio-Techne Corp. (TECH) — so it’s the least diversified of the bunch. FBT is also the most expensive of the three.
Expenses: 0.58 percent
Loncar Cancer Immunotherapy ETF (CNCR)
The CNCR ETF is one of a few funds that look at a very specific subset of the biotech industry. In this case, CNCR “is made up of a basket of companies that develop therapies to treat cancer by harnessing the body’s own immune system.” This results in a small, equal-weighted group of 30 stocks leading this field forward, including familiar names like Celgene and other big players such as AstraZeneca (AZN), but also significant weights in smaller companies like Adaptimmune Therapeutics (ADAP) and Celyad (CYAD).
Expenses: 0.79 percent
ARK Invest Genomic Revolution Multi-Sector ETF (ARKG)
Ark Invest is an ETF provider that focuses on, in its own words, “disruptive innovation,” and has created a number of thoughtful funds to that end. ARKG is no different. This ETF invests in companies that incorporate genomics in their business, which produces natural fits like genome sequencing solutions firm Illumina (ILMN) and blood safety company Cerus Corp. (CERS). However, ARKG’s wide mandate also allows it to include ag giant Monsanto Co. (MON), which uses genetic engineering in its seeds, and even Nvidia Corp. (NVDA).
Expenses: 0.95 percent
BioShares Biotechnology Products ETF (BBP)
The BBP is one of a pair of BioShares biotechnology funds that splits its strategies based on the biotech product pipeline. As its name would suggest, BBP invests in companies that have put at least one product through trials and received FDA approval, and are now focused on actually selling that product. Like many of the aforementioned funds, BBP is equally weighted, though its current top 10, which includes product-heavy Biogen, Amgen, Celgene and Gilead Sciences, unsurprisingly looks an awful lot like IBB.
Expenses: 0.85 percent
BioShares Biotechnology Clinical Trials ETF (BBC)
Unlike BBP, which invests in companies that have approved products that can help drive revenues and profits, the BBC rolls the dice on trial-stage firms that have not yet gotten a green light from the FDA, and thus have no product sales. That means you’re looking at stocks with much smaller market capitalizations, much more volatility among the holdings and a huge dependency on clinical trial news. Top holdings include Inovio Pharmaceuticals (INO) and Aimmune Therapeutics (AIMT).
Expenses: 0.85 percent
Direxion Daily S&P Biotech Bull and Bear 3x Shares (LABU/LABD)
Leveraged funds can make or lose a lot of money fast — so offering leveraged biotech funds seems almost comical. LABU (bull) is designed to return 300 percent of the Standard & Poor’s Biotechnology Select Industry index — the index behind XBI — on a daily basis, while LABD (bear) is designed to return -300 percent. These are young funds, so LABU missed most of the roaring biotech bull market. But LABD is up 125 percent for the year.
Expenses: 0.95 percent (Both fund expenses include a fee waiver through Sept. 1)
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9 Biotech Stock Funds to Buy originally appeared on usnews.com
