Thanks to exchange-traded funds (ETFs), investors don’t have to be tied to one specific stock. Biotech ETFs allow market participants to gain leverage in multiple biotech companies via one investment vehicle.
The life science sector can certainly be risky, and ETFs are a good way to enter more safely than by investing in standalone stocks. A key advantage is that even if one company in the ETF takes a hit, the impact will be less direct.
1. Global X Genomics & Biotechnology ETF (NASDAQ:GNOM)
AUM: US$81.96 million
The Global X Genomics & Biotechnology ETF tracks genomic science stocks, such as companies focused on gene editing, genomic sequencing, genetic medicine and therapy, computational genomics and biotechnology. This fund was first introduced to the market in April 2019 and invests at least 68 percent of its assets in mid- and small-cap companies.
There are 42 holdings in this biotech fund. Its top holdings include CRISPR Therapeutics (NASDAQ:CRSP) with a weight of 4.81 percent; Veracyte (NASDAQ:VCYT), weighing in at 4.5 percent; and Qiagen (NYSE:QGEN) at a 4.42 percent weightage.
2. ALPS Medical Breakthroughs ETF (ARCA:SBIO)
AUM: US$81.58 million
Launched in December 2014, the ALPS Medical Breakthroughs ETF tracks small- and mid-cap biotech stocks that have one or more drugs in either Phase II or Phase III US FDA clinical trials. Its holdings must have a market cap between US$200 million and US$5 billion.
There are 104 holdings in this biotechnology fund, with about 90 percent being small- to mid-cap stocks. Its top holdings include Vaxcyte (NASDAQ:PCVX) at a weight of 3.98 percent, Immunovant (NASDAQ:IMVT) at 3.71 percent and Cerevel Therapeutics (NASDAQ:CERE), weighing 3.46 percent.
3. ProShares Ultra NASDAQ Biotechnology (NASDAQ:BIB)
AUM: US$70.74 million
ProShares Ultra NASDAQ Biotechnology ETF was launched in April 2010 and is leveraged to the broad-based NASDAQ Biotechnology Index. The ETF Database says BIB is ideal “for investors with a bullish short-term outlook for biotechnology or pharmaceuticals companies.”
The top biotech stocks in this ETF are Vertex Pharmaceuticals (NASDAQ:VRTX) at a 7.78 percent weight, Amgen (NASDAQ:AMGN) at a 7.47 percent weight and Gilead Sciences (NASDAQ:GILD) at 7.47 percent.
4. Principal Healthcare Innovators ETF (NASDAQ:BTEC)
AUM: US$39.1 million
The Principal Healthcare Innovators ETF tracks US-listed healthcare stocks with a focus on those researching and developing innovative medicines and therapies. This fund was first introduced to the market in August 2016 and invests at least 80 percent of its assets in mid- and small-cap companies.
There are 227 holdings in this biotechnology fund. Its top holdings are Seagen (NASDAQ:SGEN) at 4.45 percent, Exact Sciences (NASDAQ:EXAS) at 3.37 percent and Alnylam Pharmaceuticals (NASDAQ:ALNY) at a 3.26 percent weightage.
5. Virtus LifeSci Biotech Products ETF (ARCA:BBP)
AUM: US$14.31 million
Launched in December 2014, the Virtus LifeSci Biotech Products ETF tracks biotech companies that have completed multiple human clinical trials and have received US Food and Drug Administration approval to sell and market a drug.
There are 55 holdings in this biotechnology fund, with about 60 percent being mid- to large-cap stocks. Its top holdings include Intercept Pharmaceuticals (NASDAQ:ICPT) at a weight of 3.41 percent, BridgeBio Pharma (NASDAQ:BBIO) at a weight of 3.35 percent and Rhythm Pharmaceuticals (NASDAQ:RYTM) at 2.84 percent.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.