By 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. Principal Healthcare Innovators ETF (NASDAQ:BTEC)
AUM: US$54.27 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 233 holdings in this biotechnology fund. Its top holdings are Exact Sciences (NASDAQ:EXAS) with a weight of 3.2 percent; Seagen (NASDAQ:SGEN), weighing in at 2.85 percent; and Alnylam Pharmaceuticals (NASDAQ:ALNY) at a 2.69 percent weightage.
2. Virtus LifeSci Biotech Products ETF (ARCA:BBP)
AUM: US$18.27 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 57 holdings in this biotechnology fund, with about 60 percent being mid- to large-cap stocks. Its top holdings include ImmunoGen (NASDAQ:IMGN), weighing 4.84 percent; Aurinia Pharmaceuticals (NASDAQ:AUPH) at a weight of 3.45 percent; and Apellis Pharmaceuticals (NASDAQ:APLS), weighing 2.93 percent.
3. Loncar Cancer Immunotherapy ETF (NSD:CNCR)
AUM: US$13.46 million
The Loncar Cancer Immunotherapy ETF was launched in October 2015, and tracks 32 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 leaders.
The top biotech stocks in this ETF are Merus (NASDAQ:MRUS) at 6.1 percent; Arcelix (NASDAQ:ACLX) at a 5.15 percent weight; and Iovance Biotherapeutics (NASDAQ:IOVA) with a 4.94 percent weightage.
4. Virtus LifeSci Biotech Clinical Trials ETF (ARCA:BBC)
AUM: US$12.29 million
The Virtus LifeSci Biotech Clinical Trials ETF tracks the performance of select biotechnology companies in the clinical trial stage. This fund invests nearly 54 percent of its assets in small-cap companies.
There are 123 holdings included in this biotechnology fund, which was launched in December 2014. Its top holdings are Madrigal Pharmaceuticals (NASDAQ:MDGL), weighing 3.79 percent; TG Therapeutics (NASDAQ:TGTX), weighing 2.46 percent; and Protagonist Therapeutics (NASDAQ:PTGX), weighing 2.3 percent.
5. Franklin Genomic Advancements ETF (CBOEBZX:HELX)
Launched in February 2020, the Franklin Genomic Advancements ETF is the newest small biotech ETF on this list. According to ETFdb.com, this fund ‘invests in companies that stand to benefit from advancements in genomic-based research techniques and technologies.’
There are 58 holdings in this biotechnology ETF, with over 91 percent being mid- to large-cap stocks. Its top holdings include Thermo Fisher Scientific (NYSE:TMO), weighing 6.09 percent; Repligen (NASDAQ:REGN) at a weight of 5.6 percent; and Danaher (NYSE:DHR), weighing 5.41 percent.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.