This is a more focused offering in some ways because it has only about 60 stocks, but it’s a more disparate fund in other ways as it includes some outliers you may not immediately think of as biotech stocks. The opportunities are particularly large for biotechnology stocks addressing big medical challenges such as cancer or Alzheimer’s or rare conditions without any existing treatments available. But some investors might be better off interacting with the industry through biotech ETFs instead.
Biotech exchange-traded funds let you invest in a basket of health care companies through a single investment. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory oanda review or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.
Second, the FDA has recently cleared Sanofi’s facility in France that caused the initial rejection of sarilumab. Finally, Eylea continues to put up impressive growth numbers in the U.S. and abroad, which bodes well for the company’s near-term earnings growth. When added together, these positives make Regeneron’s forward P/E of 26 look quite reasonable. Regeneron Pharmaceuticals (REGN 0.14%) is a former biotech darling that has gone through a bit of a rough patch. The company announced two major clinical setbacks in 2016 that caused investors concerns. To add insult to injury, the FDA also issued a surprise rejection for its rheumatoid arthritis drug candidate sarilumab, over manufacturing concerns.
The lower the average expense ratio for all U.S.-listed ETFs in an industry, the higher the rank. If an ETF’s industry classification changes, it will affect the expense ratio calculations. A biotech velocity trade ETF is a fund that gives investors exposure to companies in biotech. These funds streamline an investor’s research by having them look at funds rather than comparing individual stocks.
iShares Biotechnology ETF (NASDAQ: IBB)
Over the past five years, the fund generated an annualized return of more than 4%. Its current top positions include Exact Sciences, Pacific Biosciences of California (PACB -0.75%), Ionis Pharmaceuticals (IONS 4.08%), Teladoc Health (TDOC -0.16%), and CareDx (CDNA 6.0%). The SPDR S&P Biotech ETF has delivered a total annualized return of about 10% since its inception in 2006. Over the past five years, however, the ETF generated an average annual return of negative 0.3%. On the other hand, ETFs trade on public exchanges just like individual stocks.
Even better, is that Fidelity estimates that trends such as personalized medicine and favorable demographic trends will only spur biotech drug development into the future. The Motley Fool has no position in any of the stocks mentioned. Keith Speights owns shares of Pfizer and SPDR S&P Biotech. The Motley Fool owns shares of and recommends Alnylam Pharmaceuticals.
This aging of the population is going to provide a market for, and an incentive to develop, new treatments to help people live better as they age. That’s a nice way of saying they want to acquire their drugs. Here’s a look at each catalyst and why they will drive the biotech sector this year… A long-running debate in asset allocation circles is how much of a portfolio an investor should… Vertex Pharmaceuticals is inching closer to a new drug approval. Keith Speights owns shares of Celgene, Gilead Sciences, and SPDR S&P Biotech.
- The fund has delivered an annualized return of 8.90% over the past 10 years and has a 0.35% expense ratio.
- We reviewed many funds in this area to come up with this list of the best five biotechnology exchange-traded funds (ETFs) to invest in.
- The Principal Healthcare Innovators ETF has generated an 11.49% return over the past year and has a 0.42% expense ratio.
- Lastly, in 2022, all forms of biotech financing, including venture capital investment, debt financing, IPOs, and follow-on offerings, decreased substantially.
Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. brokerage firm hotforex According to TipRanks, covering analysts peg IBB as a consensus moderate buy. In addition, their average price target stands at $173.08, implying over 36% capital growth potential.
Vanguard S&P 500 ETF
Net earnings per share (EPS) of $6.21 improved from the $6.09 reported in the comparable period of the previous fiscal year. It could also kick-start a series of several more non-CF launches. Vertex plans to market five brand-new drugs in the next five years.
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Investors also have to consider if the ETF focuses on large caps, small caps or a blend. Investors should review the funds and see which industries they have prioritized. The First Trust NYSE Arca Biotech ETF currently holds positions in 30 biotech stocks. Its top holdings include Nektar Therapeutics, United Therapeutics, and Neurocrine Biosciences.
Factors to Consider When Choosing Biotech ETFs
There are some exceptions where funds with high expense ratios can be worth it, but they are rare. Top holdings include Celgene, Biogen, Amgen, and Gilead Sciences. Because the ETF includes several large biotechs that pay dividends, its 0.46% yield ranks as the highest of these three top biotech ETFs. These ETFs own companies that focus on areas including biological services, and developing and commercializing products based on genetic engineering and genetic analysis. Jeff Reeves writes about equity markets and exchange-traded funds for Kiplinger.
Per TipRanks, Wall Street analysts view SBIO as a consensus moderate buy. Their average price target stands at $54.62, implying almost 92% upside potential. Lastly, SBIO’s expense ratio of 0.5% comes in just under the category average of 0.57%. Still, for maximum upside potential, few might be as enticing as SBIO.
Furthermore, over 20 products, accounting for nearly $200 billion in annual sales, are expected to lose patent protection by 2030. The US Food and Drug Administration (FDA) experienced a decline in approvals for new molecular entities and biologics license applications in 2022, which was attributed to staffing shortages. However, approvals returned to pre-pandemic levels in Q1 of 2023. Lastly, in 2022, all forms of biotech financing, including venture capital investment, debt financing, IPOs, and follow-on offerings, decreased substantially. Biotechnology and all other industries are ranked based on their aggregate 3-month fund flows for all U.S.-listed ETFs that are classified by ETF Database as being mostly exposed to those respective industries.
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Each company in the index that the fund tracks has at least one drug in a Phase II or Phase III clinical trial. The passive management of the fund means it’s the cheapest of the funds on our list. Its expense ratio of 0.35% is equivalent to $3.50 for every $1,000 invested. The fund has more than $6 billion in assets, so investors need not worry about liquidity.
That means while you do have a smattering of mature biotechs, you also get plenty of exposure to lesser-known picks with high potential – like Intellia Therapeutics (NTLA), which has surged more than 266% year-to-date. Healthcare is one of the market’s most dynamic and resilient sectors. After all, one of the surest things in life is getting sick and needing care as we age – and that means guaranteed “customers” in any environment. The continued legalization of marijuana means growth for companies in this sector. Its top holdings include Agios Pharmaceuticals (AGIO 0.65%), Seagen (SGEN -0.2%), BioMarin Pharmaceutical (BMRN -0.23%), Exelixis (EXEL 0.56%), and FibroGen (FGEN -4.05%). Since then, it has generated an average annual return of more than 5%.
