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The biotechnology industry witnessed remarkable growth last year, owing to a series of mergers and acquisitions, initial public offerings, collaborative operations and new job additions in the space that boosted it throughout 2019. What’s more, the products and services offered by the industry are always in demand because of their nature, which makes biotech a lucrative investment space irrespective of market conditions.
Biotech Indexes Fare Well in 2019
The industry made headlines since the beginning of 2019, thanks to numerous mergers and acquisitions, and initial public offerings that kept the space in investors’ focus. Bristol-Myers Squibb’s acquisition of Celgene Corporation and Eli Lilly and Company’s acquisition of Loxo Oncology were some of the major deals that took place last year.
Second, the number of initial public offerings was also considerable. Biotech IPOs have been increasing steadily over the past few years. This is because biotech companies require significant financing, particularly as they advance their research. By going public, a significant portion of this much-required financing is taken care of. This also makes these biotech firms more visible for collaborations and acquisitions.
Strategic collaborations also surfaced as major game changers for the industry. Amgen’s collaboration with BeiGene and Biogen’s partnership with C4 Therapeutics were some crucial alliances last year.
Owing to these factors, major biotech ETFs and indexes performed impressively in 2019. Specifically, the SPDR S&P Biotech ETF (XBI), iShares Nasdaq Biotechnology ETF (IBB), ProShares Ultra Nasdaq Biotechnology (BIB) and NASDAQ Biotechnology Index (NBI) gained 30.5%, 23%, 41.8% and 22.9%, respectively.
5 Top Biotech Mutual Funds
We have, therefore, selected five biotech mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). In addition, the minimum initial investment for these funds is within $5,000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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 Portfolio (FBIOX - Free Report) aims for capital growth. The fund invests the majority of its assets in securities of companies primarily engaged in the research, development, manufacture and distribution of several biotechnological products and services. The fund also invests in companies that gain considerably from scientific and technological advancements in biotechnology. The non-diversified fund invests in U.S. and non-U.S. issuers.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FBIOX carries a Zacks Rank #1 and has an annual expense ratio of 0.72%, which is below the category average of 1.24%. It has returned 36% over the period of a year. FBIOX has no minimum initial investment.
Live Oak Health Sciences Fund (LOGSX - Free Report) invests the majority of its assets in equity securities of health science companies. The fund invests principally in common stocks of U.S. companies, but may also invest in equity REITs, common stocks of foreign companies and ADRs that meet the investment criteria of LOGSX.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
LOGSX carries a Zacks Rank #1 and has an annual expense ratio of 1.01%, which is below the category average of 1.24%. It has returned 19% over the period of a year. LOGSX has a minimum initial investment of $2000.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) invests the majority of its assets in the common stocks of companies that are engaged in the research, development, production or distribution of products or services related to health care, medicine or the life sciences. The non-diversified fund invests mostly in large- and medium-capitalization companies.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX carries a Zacks Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.24%. It has returned 29.1% over the period of a year. PRHSX has a minimum initial investment of $2500.
Janus Henderson Global Life Sciences Fund Class A (JFNAX - Free Report) seeks capital growth. The fund invests the majority of its assets in securities of companies that the fund’s portfolio managers believe have a life science orientation. The fund has a fundamental policy to invest at least a quarter of its assets in securities of companies that are categorized in the life sciences sector.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JFNAX carries a Zacks Rank #2 and has an annual expense ratio of 0.99%, which is below the category average of 1.24%. It has returned 29% over the period of a year. JFNAX has a minimum initial investment of $2500.
PGIM Jennison Health Sciences Fund- Class A (PHLAX - Free Report) ) invests the majority of its assets in equity and equity-related securities of companies that operate in the health sciences sector. These consist of pharmaceutical companies, biotechnology companies, medical device manufacturers, healthcare service providers and health maintenance organizations etc. The fund aims for long-term capital appreciation.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PHLAX carries a Zacks Rank #2 and has an annual expense ratio of 1.14%, which is below the category average of 1.24%. It has returned 18.2% over the period of a year. PHLAX has a minimum initial investment of $2500.
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5 Best-Performing Biotech Mutual Funds of 2019
The biotechnology industry witnessed remarkable growth last year, owing to a series of mergers and acquisitions, initial public offerings, collaborative operations and new job additions in the space that boosted it throughout 2019. What’s more, the products and services offered by the industry are always in demand because of their nature, which makes biotech a lucrative investment space irrespective of market conditions.
Biotech Indexes Fare Well in 2019
The industry made headlines since the beginning of 2019, thanks to numerous mergers and acquisitions, and initial public offerings that kept the space in investors’ focus. Bristol-Myers Squibb’s acquisition of Celgene Corporation and Eli Lilly and Company’s acquisition of Loxo Oncology were some of the major deals that took place last year.
Second, the number of initial public offerings was also considerable. Biotech IPOs have been increasing steadily over the past few years. This is because biotech companies require significant financing, particularly as they advance their research. By going public, a significant portion of this much-required financing is taken care of. This also makes these biotech firms more visible for collaborations and acquisitions.
Strategic collaborations also surfaced as major game changers for the industry. Amgen’s collaboration with BeiGene and Biogen’s partnership with C4 Therapeutics were some crucial alliances last year.
Owing to these factors, major biotech ETFs and indexes performed impressively in 2019. Specifically, the SPDR S&P Biotech ETF (XBI), iShares Nasdaq Biotechnology ETF (IBB), ProShares Ultra Nasdaq Biotechnology (BIB) and NASDAQ Biotechnology Index (NBI) gained 30.5%, 23%, 41.8% and 22.9%, respectively.
5 Top Biotech Mutual Funds
We have, therefore, selected five biotech mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). In addition, the minimum initial investment for these funds is within $5,000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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 Portfolio (FBIOX - Free Report) aims for capital growth. The fund invests the majority of its assets in securities of companies primarily engaged in the research, development, manufacture and distribution of several biotechnological products and services. The fund also invests in companies that gain considerably from scientific and technological advancements in biotechnology. The non-diversified fund invests in U.S. and non-U.S. issuers.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FBIOX carries a Zacks Rank #1 and has an annual expense ratio of 0.72%, which is below the category average of 1.24%. It has returned 36% over the period of a year. FBIOX has no minimum initial investment.
Live Oak Health Sciences Fund (LOGSX - Free Report) invests the majority of its assets in equity securities of health science companies. The fund invests principally in common stocks of U.S. companies, but may also invest in equity REITs, common stocks of foreign companies and ADRs that meet the investment criteria of LOGSX.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
LOGSX carries a Zacks Rank #1 and has an annual expense ratio of 1.01%, which is below the category average of 1.24%. It has returned 19% over the period of a year. LOGSX has a minimum initial investment of $2000.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) invests the majority of its assets in the common stocks of companies that are engaged in the research, development, production or distribution of products or services related to health care, medicine or the life sciences. The non-diversified fund invests mostly in large- and medium-capitalization companies.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX carries a Zacks Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 1.24%. It has returned 29.1% over the period of a year. PRHSX has a minimum initial investment of $2500.
Janus Henderson Global Life Sciences Fund Class A (JFNAX - Free Report) seeks capital growth. The fund invests the majority of its assets in securities of companies that the fund’s portfolio managers believe have a life science orientation. The fund has a fundamental policy to invest at least a quarter of its assets in securities of companies that are categorized in the life sciences sector.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JFNAX carries a Zacks Rank #2 and has an annual expense ratio of 0.99%, which is below the category average of 1.24%. It has returned 29% over the period of a year. JFNAX has a minimum initial investment of $2500.
PGIM Jennison Health Sciences Fund- Class A (PHLAX - Free Report) ) invests the majority of its assets in equity and equity-related securities of companies that operate in the health sciences sector. These consist of pharmaceutical companies, biotechnology companies, medical device manufacturers, healthcare service providers and health maintenance organizations etc. The fund aims for long-term capital appreciation.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PHLAX carries a Zacks Rank #2 and has an annual expense ratio of 1.14%, which is below the category average of 1.24%. It has returned 18.2% over the period of a year. PHLAX has a minimum initial investment of $2500.
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