ETF: As the globe grappled with coronavirus and sought viable remedies, 2020 was the year for growth-oriented health care brands. However, as the pandemic evolved and some of the COVID-related triumphs were priced in, several fields – including the once-popular industry of biotechnology – took a step back in 2021. Several major biotech equities have fallen dramatically in value over the previous year, despite the fact that the S&P 500 has risen 22 percent. However, as the old adage goes, investors earn the greatest money when they buy cheap and sell high. And, given biotech’s long-term promise, some traders are seeing the current downturn as a buying opportunity. Here are some of the finest biotech to purchase if you’re positive in the industry despite recent problems in late 2021 and early 2022.
The following are the seven best biotech ETFs to invest in:
- Biotechnology ETF (iShares) (IBB)
- SPDR S&P Biotech ETF (XBI)
- ETF ARK Genomic Revolution (ARKG)
- The First Trust NYSE Arca Biotechnology ETf(FBT)
- ETF for Genomics, Immunology, and Healthcare(IDNA)
- Invesco Dynamic BioTech & Genome ETF(PBE)
- Daily S&P Direxion ETF for Biotech Bull 3X Shares (LABU)
Biotechnology ETF (iShares) ( IBB)
IBB is the biggest biotech ETF in terms of assets, with approximately $10 billion under management, and is one of the most established methods to get exposure to the high-growth sector of health care. It also trades more than 2 million shares each day on average, making it a popular and liquid vehicle in what can be a tumultuous market at times. Amgen Inc. (AMGN) and Gilead Sciences Inc. are two of its top holdings among its around 370 interests at the moment (GILD). Buyer beware: These aren’t exactly modest upstarts, as the combination is worth about $200 billion in market value – and accounts for more than 18% of the whole IBB portfolio. However, for investors wanting to play the major names in biotech, this top iShares fund may not be such a bad bet.
SPDR S&P Biotech ETF (XBI)
This SPDR fund is now the second-largest biotech fund, with over $6 billion in assets. While it is equally focused on gene-editing startups, development-stage drugmakers, and high-tech diagnostic enterprises, its structure is fundamentally different from that of IBB. It features a limited number of equities, with a lineup of just roughly 200 components. Furthermore, XBI aspires to have “equal weight,” with frequent rebalancing to guarantee that no one stock has an undue influence. That means you’ll discover lesser-known biotech firms like Arena Pharmaceuticals Inc. (ARNA), a $5 billion gastrointestinal specialist, and PTC Therapeutics Inc. (PTCT), a $3 billion oncology business, alongside the big guys to give real exposure to the whole industry.
ETF ARK Genomic Revolution (ARKG)
ARKG, a $5 billion actively managed by the exchange-traded fund, differs from the previous two funds in that it is meant to have 50 or fewer assets based on a unique set of internal parameters. In principle, this puts money behind the best possibilities — at least, according to the screening approach used by the managers of this biotech exchange-traded fund, overseen by renowned investor Cathie Wood. With a 7% weighting, DNA screening test expert Exact Sciences Corp. (EXAS) now holds the top single position, followed by remote health care player Teladoc Health Inc. (TDOC). Of course, it’s also worth mentioning that these choices haven’t performed very well recently, and as a consequence, ARKG has a 12-month loss of more than 50%. However, if you’re positive in the long term and want to put your faith in the management of this famous fund, this might be a good time to get into this biotech ETF.
The First Trust NYSE Arca Biotechnology ETF
This roughly $2 billion First Trust offering, which only has 30 total assets, is another fund focusing on a narrow selection of high-octane biotechs. However, no single ownership exceeds 5%, indicating that the cash is distributed rather evenly throughout this list. Acadia Pharmaceuticals Inc. (ACAD) is a $3 billion neurological treatment expert, while FibroGen Inc. (FGEN) is a $1 billion biotech that specializes in several uncommon organ ailments. FBT has been quite volatile recently, but its 17 percent loss over the past year is really considerably better than that of other of its competitor biotech exchange-traded fund on our list. Our demonstrates that with a targeted list of high-quality components, this First Trust investment can generate profits even in a challenging market.
ETF for Genomics, Immunology, and Healthcare(IDNA)
We’ve moved on from the billion-dollar biotech ETFs to the smaller, more boutique options. This iShares IDNA ETF is an excellent illustration of this since the biotech ETF provides a concentrated fund with just 50 total components with a special concentration on “innovation in genetics, immunology, and bioengineering.” Right now, that list includes European megacap pharmaceutical Sanofi (SNY) and $5 billion cancer biotech Exelixis Inc. (EXEL). Despite the restricted approach, the assets in this market segment are rather diversified. And, despite its tiny size, IDNA has $300 million in assets, so it has a significant amount of backing on Wall Street.
Invesco Dynamic Biotech & Genome ETF
This Invesco fund, an approximately $200 million biotech ETF, is another tactical bet on a subset of companies in the industry, this time targeting gene-editing and DNA-related skills. This covers both large biotech companies such as $60 billion Regeneron Pharmaceuticals Inc. (REGN) and smaller up-and-comers such as Ireland-based “orphan medicine” researcher Alkermes PLC (ALKS). Though prices have been erratic, a 20 percent drop in the previous year puts this tiny biotech ETF ahead of many of its bigger counterparts, and this resilience may make it worth a look in 2022.
The Direxion Daily S&P Biotech Bull 3X Shares ETF(LABU)
No discussion of fast-moving biotech ETFs would be complete without mentioning the fastest-moving fund of all — Direxion’s “leveraged” offering aspires to generate 300 percent of the daily returns of the S&P Biotechnology Select Industry Index. When circumstances are good, as when this ETF almost quadrupled from its late 2020 lows to a high that temporarily above $185 in early 2021, that’s excellent news. However, it’s worth mentioning that this biotech ETF is now trading in the low $20 level, representing a nearly 90 percent drop from its 52-week high. If you’re not scared of taking significant risks and want to invest in biotech, LABU might play a limited part in your portfolio. However, given the present trend to the negative, investors should proceed with caution.