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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$100.17 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 75 percent of its assets in mid- and small-cap companies.
There are 42 holdings in this biotech fund. Its top holdings include Natera (NASDAQ:NTRA), weighing in at 6.79 percent; CRISPR Therapeutics (NASDAQ:CRSP) with a weight of 6.22 percent; and Ultragenyx Pharmaceutical (NASDAQ:RARE) at a 4.71 percent weightage.
2. ProShares Ultra NASDAQ Biotechnology (NASDAQ:BIB)
AUM: US$96.8 million
The ProShares Ultra NASDAQ Biotechnology ETF was launched in April 2010 and is leveraged to the broad-based NASDAQ Biotechnology Index, which currently tracks 220 holdings. ETFdb.com says the fund is ideal “for investors with a bullish short-term outlook for biotechnology or pharmaceutical companies.”
The top biotech stocks in this ETF are Regeneron Pharmaceuticals (NASDAQ:REGN) at a 5.98 percent weight; Vertex Pharmaceuticals (NASDAQ:VRTX) at a 5.86 percent weight; and Amgen (NASDAQ:AMGN) at a 5.12 percent weight.
3. Tema Cardiovascular and Metabolic ETF (NASDAQ:HRTS)
AUM: US$49.86 million
Launched in November 2023, the Tema Cardiovascular and Metabolic ETF tracks biotech stocks with a focus on diabetes, obesity and cardiovascular diseases. More than three-quarters of its holdings are based in the US.
There are 45 holdings in this biotechnology fund, with about a 50/50 split between small- to mid-cap stocks and large-cap companies. Its top holdings include Eli Lilly (NYSDE:LLY) at a weight of 5.02 percent; Vertex Pharmaceuticals at 4.91 percent; and Viking Therapeutics (NASDAQ:VXTK), weighing in at 3.29 percent.
4. Principal Healthcare Innovators ETF (NASDAQ:BTEC)
AUM: US$48.6 million
The Principal Healthcare Innovators ETF tracks US-listed healthcare stocks with a focus on companies that are researching and developing innovative medicines and therapies. This fund was first introduced to the market in August 2016 and invests at least 88 percent of its assets in mid- and small-cap companies.
There are 219 holdings in this biotechnology fund. Its top holdings are Karuna Therapeutics (NASDAQ:KRTX) at 2.81 percent; Sarepta Therapeutics (NASDAQ:SRPT) at a 2.54 percent weightage; and Exact Sciences (NASDAQ:EXAS) at 2.45 percent.
5. Range Cancer Therapeutics ETF (NASDAQ:CNCR)
AUM: US$21.88 million
Launched in October 2013, the Range Cancer Therapeutics ETF provides exposure to biotech companies focused on a wide range of cancer therapeutic modalities. Its broad basket of holdings includes companies across nearly the entire lifecycle of cancer drug development and distribution.
There are 82 holdings in this biotechnology fund, with about 77 percent being small- to mid-cap stocks. Its top holdings include MacroGenics (NASDAQ:MGNX) at a weight of 3.85 percent; Janux Therapeutics (NASDAQ:JANX) at a weight of 3.57 percent; and Mersana Therapeutics (NASDAQ:MRSN) at 3.38 percent.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.