Want to invest in small biotech ETFs? Here we profile eight that life science investors may want to look into.
Thanks to exchange-traded funds (ETFs), investors don’t have to be tied to one specific stock. ETFs allow market participants to invest in a group of companies, usually in a similar sector.
The life science sector certainly holds a risk factor, and ETFs are a good way to make an investment in the industry more safely. A key advantage is that even if one company in the group takes a hit, the impact will be less direct for investors.
Below, the Investing News Network takes a look at eight small biotech ETFs for investors to consider. All were selected using ETFdb.com, and have total assets under US$100 million. All figures were current at the time of publication.
1. Principal Healthcare Innovators Index ETF (NASDAQ:BTEC)
Market cap: US$53.05 million
This small-cap biotechnology ETF has a high number of holdings — 181, to be exact. Its top five holdings include BioMarin Pharmaceuticals (NASDAQ:BMRN), weighted at 3.24 percent; Dexcom (NASDAQ:DXCM) with a 3.11 percent weighting; Seattle Genetics (NASDAQ:SGEN) holding a 3.04 percent weight; Alexion Pharmaceuticals (NASDAQ:ALXN) weighing in at 3.04 percent; and Exact Sciences (NASDAQ:EXAS) coming in with a 2.75 percent weighting.
As its name implies, this ETF is a healthcare-first ETF, giving investors wide exposure to growth and value shares of primarily small-cap biotech stocks in the healthcare industry. Started on August 19, 2016, the index primary focuses on US healthcare companies that are in development stage or waiting for regulatory approval rather than companies already selling products on the market.
2. Loncar Cancer Immunotherapy ETF (NASDAQ:CNCR)
Market cap: US$38.17 million
This next biotechnology ETF was launched on October 13, 2015 and tracks 26 holdings focused on cancer therapies that use the body’s own immune system. Of its holdings, the majority are small caps in the clinical-stage biotech sector, with a handful of large-cap immunotherapy industry leaders on the top.
The top five biotech stocks in this ETF are: Mirati Therapeutics (NASDAQ:MRTX) with a 7.3 percent weightage; Iovance Biotherapeutics (NASDAQ:IOVA) representing a 6.89 percent weighting; Argenx (NASDAQ:ARGX), which holds a 5.23 percent weight; MacroGenics (NASDAQ:MGNX) weighing in at 5.04 percent; and Bluebird Bio (NASDAQ:BLUE), which comes in holding a 4.74 percent weight.
3. Virtus LifeSci Biotech Products ETF (ARCA:BBP)
Market cap: US$33.93 million
Begun on December 16, 2014, the Virtus LifeSci Biotech Products ETF offers investors a portfolio of biotech product companies that have a minimum of one drug therapy approved by the US Food and Drug Administration (FDA).
With 42 companies in its portfolio, the ETF’s top five holdings are: The Medicines Company (NASDAQ:MDCO) holding a 4.29 percent weight; Array Biopharma (NASDAQ:ARRY), which represents a 4.15 percent weight; Portola Pharmaceuticals (NASDAQ:PTLA), which weighs in at 3.87 percent; Acadia Pharmaceuticals (NASDAQ:ACAD), holding 3.52 percent of the index’s weight; and Celgene (NASDAQ:CELG), weighing in at 3.32 percent of the index.
4. ProShares UltraPro NASDAQ Biotechnology ETF (NASDAQ:UBIO)
Market cap: US$28.67 million
With 220 holdings, the ProShares UltraPro NASDAQ Biotechnology ETF was begun on June 22, 2015. Its top five components weigh in at more than 5 percent each. Gilead Sciences (NASDAQ:GILD), Celgene, Amgen (NASDAQ:AMGN), Biogen (NASDAQ:BIIB) and Vertex Pharmaceuticals (NASDAQ:VRTX) are the five top biotechnology companies and large pharma stocks in this fund.
This ETF aims to make a large return for investors, saying it is looking for “three times the return of an index or other benchmark (target) for a single day, as measured from one NAV calculation to the next.”
5. Virtus LifeSci Biotech Clinical Trials ETF (ARCA:BBC)
Market cap: US$27.84 million
This fund tracks biotech companies that are listed in the US and have lead drugs in clinical trials. ETF.com refers to it as a “high-risk and high-reward bet” with a specific focus.
There are 96 holdings included in this biotechnology fund, which was started on December 16, 2014. Its top holdings are: Voyager Therapeutics (NASDAQ:VYGR), weighing 2.22 percent; ArQule (NASDAQ:ARQL), which holds 2.16 percent weight; Uniqure (NASDAQ:QURE), which represents a 2.16 percent weighting; Nightstar Therapeutics (NASDAQ:NITE) at 2.13 percent weight; and Eipzyme (NASDAQ:EPZM), also at 2.13 percent weightage.
6. ProShares UltraShort NASDAQ Biotechnology ETF (NASDAQ:BIS)
Market cap: US$24.29 million
One of the oldest on this list, having started on April 7, 2010, the ProShares UltraShort NASDAQ Biotechnology ETF currently tracks a number of top companies within the industry. As it currently stands, it has an impressive 219 holdings, with the five top-weighted companies including: Gilead Sciences, Amgen, Celgene, Biogen and Vertex Pharmaceuticals.
This ETF is the only inverse biotech fund, making it a tactile tool. ProShares’ fact sheet on the fund advises investors to “monitor holdings consistent with their strategies, as frequently as daily.” For this reason it could be a challenging ETF for investors new to the space.
7. Global X Genomics & Biotechnology ETF (NASDAQ:GNOM)
Market cap: US$4.19 million
The Global X Genomics & Biotechnology ETF is the newest addition to this list, having begun on April 5, 2019. According to ETFdb.com, the fund tracks the Solactive Genomics Index.
According to the fund’s summary, it tracks companies that could potentially rake in benefits from genomic science advancements, including gene editing, genomic sequencing, genetic medicine and therapy, computational genomics and biotechnology.
This index currently tracks 41 companies in its portfolio, with the top five weighing over 4.2 percent each on the index. The top five companies are PTC Therapeutics (NASDAQ:PTCT), Blueprint Medicines (NASDAQ:BPMC), Illumina (NASDAQ:ILMN), Genscript Biotech (HKG:1548) and Biomarin Pharmaceutical (NASDAQ:BMRN).
8. ProShares UltraPro Short NASDAQ Biotechnology ETF (NASDAQ:ZBIO)
Market cap: US$3.92 million
Like other ProShares ETFs, this fund wants to produce results equal to three times the inverse of the daily performance of the NASDAQ Biotechnology Index. The ProShares UltraPro Short NASDAQ Biotechnology ETF was started on June 22, 2015, and tracks 220 holdings, with the largest being Gilead Sciences, Amgen, Celgene, Biogen and Vertex Pharmaceuticals.
This is an updated version of an article originally published by the Investing News Network in 2015.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.