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4 Best-Performing Biotech Mutual Funds in 2019 So Far
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After stumbling into the bear market territory in the second half of last year, the U.S. biotechnology sector recovered in the first six months of this year. SPDR S&P Biotech ETF, iShares Nasdaq Biotechnology ETF, ProShares Ultra Nasdaq Biotechnology and NASDAQ Biotechnology Index have surged 18.2%, 8.7%, 14.5% and 8.7%, respectively, in the year-to-date (YTD) period.
Historically, the space has been risky from investors’ standpoint. This is because, they bet on the assumption that products in the pipeline would turn out be highly successful. But any failure in a key clinical trial can make things really unpleasant for investors. Nonetheless, a higher number of mergers and acquisitions (M&A) and an increased number of FDA approvals have been pivotal in shaping up the fortunes for the biotech sector. Let’s look at some of the best-performing mutual funds from the space so far in 2019.
A Banner Year for Biotech
So far this year, 25 of the 32 healthcare IPOs have been from the biotech sector. Furthermore, the average first-day return from such offerings has been 9% so far. The most successful biotech IPOs this year have been Turning Point Therapeutics, Inc. and Cortexyme, Inc. Shares of Turning Point and Cortexyme have risen 100% since they went public in April and May, respectively.
Moreover, June turned out to be the best month for biotech IPOs, with six biotech companies going public in a week’s time in mid-June. BridgeBio Pharma, Inc. and Adaptive Biotechnologies Corporation went public in the month and had successful IPOs. Both companies have a market cap of over $3 billion.
The trend began early in the year when pharmaceutical giant Bristol-Myers Squibb offered in January $74 billion to acquire cancer drugmaker Celgene. Following this, Eli Lilly and Company acquired Loxo Oncology for $8 billion in February.
4 Best Funds to Buy Now
Given such bullish circumstances, we have highlighted four biotech mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to gain from such factors. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Biotechnology (FBIOX - Free Report) fund invests the majority of its net assets in common stocks of companies mostly engaged in the research, development and distribution of biotechnological products. The fund primarily seeks capital growth. The non-diversified fund invests in U.S. and non-U.S. companies alike.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 18.6%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FBIOX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.72%, which is below the category average of 1.23%.
Vanguard Specialized Portfolios Health Care Fund (VGHCX - Free Report) seeks long-term capital growth by investing in securities of companies that are engaged in production and distribution of products and services from the healthcare industry. The fund may invest about half of its assets in non-U.S. stocks.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 6.9%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VGHCXcarries a Zacks Mutual Fund Rank #2and has an annual expense ratio of 0.34%, which is below the category average of 1.23%.
Invesco Health Care Fund Class Y (GGHYX - Free Report) aims for long-term capital appreciation. The fund invests the majority of its assets in securities of companies that are engaged in operations in healthcare-related industries. The fund mostly invests in equity securities, depositary receipts and securities convertible into equity securities.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 15.4%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
GGHYX holds a Zacks Mutual Fund Rank #1and has an annual expense ratio of 0.85%, which is below the category average of 1.23%.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) invests a minimum of 80% of its assets in common stocks of companies mostly engaged in research, production and distribution of products and services in the healthcare-related industry. The non-diversified fund mostly invests in mid- and large-capitalization companies.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 17.5%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX carries a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.23%.
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4 Best-Performing Biotech Mutual Funds in 2019 So Far
After stumbling into the bear market territory in the second half of last year, the U.S. biotechnology sector recovered in the first six months of this year. SPDR S&P Biotech ETF, iShares Nasdaq Biotechnology ETF, ProShares Ultra Nasdaq Biotechnology and NASDAQ Biotechnology Index have surged 18.2%, 8.7%, 14.5% and 8.7%, respectively, in the year-to-date (YTD) period.
Historically, the space has been risky from investors’ standpoint. This is because, they bet on the assumption that products in the pipeline would turn out be highly successful. But any failure in a key clinical trial can make things really unpleasant for investors. Nonetheless, a higher number of mergers and acquisitions (M&A) and an increased number of FDA approvals have been pivotal in shaping up the fortunes for the biotech sector. Let’s look at some of the best-performing mutual funds from the space so far in 2019.
A Banner Year for Biotech
So far this year, 25 of the 32 healthcare IPOs have been from the biotech sector. Furthermore, the average first-day return from such offerings has been 9% so far. The most successful biotech IPOs this year have been Turning Point Therapeutics, Inc. and Cortexyme, Inc. Shares of Turning Point and Cortexyme have risen 100% since they went public in April and May, respectively.
Moreover, June turned out to be the best month for biotech IPOs, with six biotech companies going public in a week’s time in mid-June. BridgeBio Pharma, Inc. and Adaptive Biotechnologies Corporation went public in the month and had successful IPOs. Both companies have a market cap of over $3 billion.
The trend began early in the year when pharmaceutical giant Bristol-Myers Squibb offered in January $74 billion to acquire cancer drugmaker Celgene. Following this, Eli Lilly and Company acquired Loxo Oncology for $8 billion in February.
4 Best Funds to Buy Now
Given such bullish circumstances, we have highlighted four biotech mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to gain from such factors. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Biotechnology (FBIOX - Free Report) fund invests the majority of its net assets in common stocks of companies mostly engaged in the research, development and distribution of biotechnological products. The fund primarily seeks capital growth. The non-diversified fund invests in U.S. and non-U.S. companies alike.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 18.6%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FBIOX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.72%, which is below the category average of 1.23%.
Vanguard Specialized Portfolios Health Care Fund (VGHCX - Free Report) seeks long-term capital growth by investing in securities of companies that are engaged in production and distribution of products and services from the healthcare industry. The fund may invest about half of its assets in non-U.S. stocks.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 6.9%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VGHCXcarries a Zacks Mutual Fund Rank #2and has an annual expense ratio of 0.34%, which is below the category average of 1.23%.
Invesco Health Care Fund Class Y (GGHYX - Free Report) aims for long-term capital appreciation. The fund invests the majority of its assets in securities of companies that are engaged in operations in healthcare-related industries. The fund mostly invests in equity securities, depositary receipts and securities convertible into equity securities.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 15.4%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
GGHYX holds a Zacks Mutual Fund Rank #1and has an annual expense ratio of 0.85%, which is below the category average of 1.23%.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) invests a minimum of 80% of its assets in common stocks of companies mostly engaged in research, production and distribution of products and services in the healthcare-related industry. The non-diversified fund mostly invests in mid- and large-capitalization companies.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 17.5%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX carries a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.23%.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>