Green Money 00
10年前
The Best Biotech ETF Isn't Always The Biggest
Benzinga
By David Fabian February 25, 2015 3:06 PM
Biotechnology ETFs have leapt out of the gate in 2015 with another strong spurt of momentum that has catapulted them to the top of sector rankings. The unequivocal asset leader in this category is the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: IBB), which has more than $8 billion under management.
IBB has gained more than 12 percent so far this year and continues to shine as an industry-leading benchmark. This performance, while impressive, is still a far cry from several specialized biotech ETFs with unique index construction methodologies.
ALPS Medical Breakthroughs
The relatively new ALPS Medical Breakthroughs ETF (NYSE: SBIO) was released on the last day of 2014 and has achieved an impressive return of nearly 18 percent this year.
This ETF focuses on 75 small- and mid-cap biotechnology and pharmaceutical companies with a weighted-average market cap of $2 billion. SBIO has $17 million in total assets and charges an expense ratio of 0.50 percent.
Related Link: JPM Securities Picks Through Biotech News For Winners
This ETF is designed for those seeking more aggressive or early-stage biotech companies with a smaller footprint than the larger stocks that dominate an index like IBB. In addition, the inherent diversification in SBIO can be more advantageous than researching and investing in individual companies.
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SPDR S&P Biotech
Another standout in the biotech space has been the SPDR S&P Biotech (ETF) (NYSE: XBI), which has gained more than 16 percent this year.
XBI relies on a modified equal-weighted methodology to distribute $2 billion in assets to 88 underlying stocks. This allows for smaller companies within the index to have a much greater pull on the total performance of the fund than traditional market-cap weighted strategies.
This ETF charges an expense ratio of 0.35 percent annually, as well.
XBI still has exposure to top companies such as Gilead Sciences, Inc. (NASDAQ: GILD) and Celgene Corporation (NASDAQ: CELG). However, it also beckons niche companies – such Foundation Medicine Inc (NASDAQ: FMI) – from all major U.S. exchanges.
The variances in this menu of ETFs highlight the significance of index construction on overall returns. Right now, smaller biotechnology companies are a driving force of outperformance, but that may change as conditions evolve.
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© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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farviewhill
10年前
Excellent and very informative post on what is a very exciting new way to invest in promising biotechs at important stages in their development, while greatly minimizing risk of ownership and maximizing the potential for huge gains.
As noted, only biotechs that have passed FDA phase 1 and are into Phase 2 or 3 are in the investment portfolio.
This imo, is especially good, as it's during these confirming phases, as companies start to release data, that historically they see mutual fund and other institutional accumulation, which can be a massive 'herd instinct' accumulation given the news.
Biotech history at this stage in their development, has numerous such stories, KERX, just one recent example among many.
The major point is that this becomes an ideal time to invest in analyst selected promising biotechs at a most advantageous time in their share price growth.
This etf, imo, promises to be a huge winner and sure beats the massive pitfalls and huge risks of owning one or two biotechs in stages of their development, from matters such as dilution and surprise clinical failures along the way.
Green Money 00
10年前
New Biotech ETF Hits the Market
By Chris Lange December 31, 2014 8:40 am EST
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The ALPS Medical Breakthroughs ETF (NYSEMKT: SBIO) debuted on the market Wednesday, December 31, 2014. This exchange traded fund will track the Poliwogg Medical Breakthroughs Index (PMBI), which is designed to capture research and development opportunities in biotechnology and pharmaceutical industries. The PMBI is made up of small-cap and mid-cap biotech stocks listed on U.S. exchanges.
The index has a unique but straightforward design. The basis for selection to be included in the index is that the company must be a biotech or pharmaceutical firm with one or more drugs in the Phase 2 or Phase 3 FDA clinical trials. Companies also must have a market cap between $200 million and $5 billion.
The liquidity for these companies included must be greater than $1 million moved daily, and the weighting will be modified by market cap, with a max 4.5% weighting at each rebalance.
The PMBI Index also has some opportunities for investors who are only seeking pure play exposure to emerging biotech companies. The index is tilted to small and mid-cap firms, which is generally where the innovation occurs and where a larger portion of investors’ dollars are spent on R&D. In contrast, large-cap biotech firms typically spend more investor dollars on marketing and distribution, as opposed to innovation.
Also the index will allow for efficient access to clinical trials for considerably cheaper than other competing biotech indexes. Compared to the Nasdaq Biotechnology Index, companies in the PMBI paid on average 74% less per clinical trial. Promising results from clinical trials can lead to acquisition by one of the large established players in the biotech or traditional pharmaceuticals industries.
The index helps to take out some of the risk for stock pickers from what is considered a particularly difficult and challenging industry.
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By Chris Lange
Read more: ALPS Medical Breakthroughs ETF Hits the Market (NYSEMKT: SBIO) - 24/7 Wall St. http://247wallst.com/healthcare-business/2014/12/31/new-biotech-etf-hits-the-market/#ixzz3O9JzRM62
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