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4 Biotech Mutual Funds You Should Add to Your Portfolio
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Experts believe that U.S. biotech is less susceptible to a rout from COVID-19. They argue that since these companies are still in early-stage development, yet to sell their products, they are somewhat immune to demand shocks.
Furthermore, most of the listings on American bourses so far in 2020 have been from biotech. The space offers a sliver of hope to investors closely following the IPOs. The trend is likely to continue for the rest of the year despite listings from other sectors that are expected to suffer from the coronavirus pandemic.
One of the primary reasons behind this is that biotech companies mostly list their stocks at the clinical trial stage, without even starting to make revenues. Investors who bet on long-term prospects of the particular idea, drug or a therapy usually eye such listings. Historically, such companies have survived market gyrations and recessions.
Given the current scenario, analysts also expect some of the biotech stocks to skyrocket and rake in big gains. These companies have impressive product pipelines which include candidates likely to become blockbuster drugs. Meanwhile, biotech ETFs have been on a tear lately. iShares Nasdaq Biotechnology ETF (IBB), SPDR S&P Biotech ETF (XBI) and First Trust Amex Biotechnology Index (FBT) have gained 24.9%, 33.2% and 29.9%, respectively over the past 30 days.
4 Biotech Funds to Buy Now
We have highlighted four biotech mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy) that are poised to gain from bullish circumstances. Moreover, these funds have encouraging three-year 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 BiotechnologyPortfolio (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 three-year benchmark is 4.6%. 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 1.24%.
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 three-year benchmark is 9.2%. 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 #2 and has an annual expense ratio of 0.77%, which is below the category average of 1.24%.
Vanguard Health Care Fund Investor Shares (VGHCX - Free Report) seeks long-term capital growth by investing in securities of companies that are engaged in the 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 three-year benchmark is 6.2%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VGHCX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.34%, which is below the category average of 1.24%.
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. Specifically, the fund's return over the three-year benchmark is 10.5%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
LOGSXholds a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 1.05%, which is below the category average of 1.24%.
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4 Biotech Mutual Funds You Should Add to Your Portfolio
Experts believe that U.S. biotech is less susceptible to a rout from COVID-19. They argue that since these companies are still in early-stage development, yet to sell their products, they are somewhat immune to demand shocks.
Furthermore, most of the listings on American bourses so far in 2020 have been from biotech. The space offers a sliver of hope to investors closely following the IPOs. The trend is likely to continue for the rest of the year despite listings from other sectors that are expected to suffer from the coronavirus pandemic.
One of the primary reasons behind this is that biotech companies mostly list their stocks at the clinical trial stage, without even starting to make revenues. Investors who bet on long-term prospects of the particular idea, drug or a therapy usually eye such listings. Historically, such companies have survived market gyrations and recessions.
Given the current scenario, analysts also expect some of the biotech stocks to skyrocket and rake in big gains. These companies have impressive product pipelines which include candidates likely to become blockbuster drugs. Meanwhile, biotech ETFs have been on a tear lately. iShares Nasdaq Biotechnology ETF (IBB), SPDR S&P Biotech ETF (XBI) and First Trust Amex Biotechnology Index (FBT) have gained 24.9%, 33.2% and 29.9%, respectively over the past 30 days.
4 Biotech Funds to Buy Now
We have highlighted four biotech mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy) that are poised to gain from bullish circumstances. Moreover, these funds have encouraging three-year 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 Portfolio (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 three-year benchmark is 4.6%. 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 1.24%.
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 three-year benchmark is 9.2%. 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 #2 and has an annual expense ratio of 0.77%, which is below the category average of 1.24%.
Vanguard Health Care Fund Investor Shares (VGHCX - Free Report) seeks long-term capital growth by investing in securities of companies that are engaged in the 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 three-year benchmark is 6.2%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VGHCX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.34%, which is below the category average of 1.24%.
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. Specifically, the fund's return over the three-year benchmark is 10.5%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
LOGSXholds a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 1.05%, which is below the category average of 1.24%.
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 >>