Thanks to exchange-traded funds (ETFs), investors don’t have to be tied to one specific stock. When it comes to biotech ETFs, they give sector participants exposure to many biotech companies via one vehicle.
ETFs are a popular choice as they allow investors to enter the market more safely compared to 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.
All other figures were also current as of that date. Read on to learn more about these investment vehicles.
1. ProShares Ultra NASDAQ Biotechnology (NASDAQ:BIB)
AUM: US$87.99 million
The ProShares Ultra NASDAQ Biotechnology ETF was launched in April 2010 and is leveraged to offer twice daily long exposure to the broad-based NASDAQ Biotechnology Index, making it an ideal choice “for investors with a bullish short-term outlook for biotechnology or pharmaceutical companies.” However, analysts also advise investors with a low risk tolerance or a buy-and-hold strategy against investing in this fund due to its unique nature.
Of the 218 holdings in this ETF, the top biotech stocks in the ETF are Regeneron Pharmaceuticals (NASDAQ:REGN) at a 6.01 percent, Gilead Sciences (NASDAQ:GILD) at 5.97 percent and Amgen (NASDAQ:AMGN) at 5.49 percent.
2. Global X Genomics & Biotechnology ETF (NASDAQ:GNOM)
AUM: US$82.83 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 70 percent of its assets in mid- and small-cap companies.
There are 43 holdings in this biotech fund. Its top holdings include Alnylam Pharmaceuticals (NASDAQ:ALNY) at a weight of 6.73 percent, Avidity Bioscience (NASDAQ:RNA) with a weight of 5.29 percent and Legend Biotech (NASDAQ:LEGN) at 4.52 percent.
3. Tema Obesity and Cardiometabolic ETF (NASDAQ:HRTS)
AUM: US$81.7 million
Launched in November 2023, the Tema Obesity and Cardiometabolic ETF tracks biotech stocks with a focus on diabetes, obesity and cardiovascular diseases. The fund was renamed on March 25; previously it was known as the Tema Cardiovascular and Metabolic ETF. More than three-quarters of its holdings are based in the US.
There are 46 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 Alnylam Pharmaceuticals, Amgen at 5.65 percent and Eli Lilly and Company (NYSE:LLY) at 5.56 percent.
4. Tema Oncology ETF (NASDAQ:CANC)
AUM: US$47.94 million
The Tema Oncology ETF provides exposure to biotech companies operating in the oncology industry. It includes companies developing a range of cancer treatments, including CAR-T cell therapies and bispecific antibodies.
Launched in August 2023, this biotechnology fund has 49 holdings, with about 46 percent being small- to mid-cap stocks and 4.6 percent being micro stocks. Among its top holdings are Regeneron Pharmaceuticals at a weight of 6.1 percent, AstraZeneca (NASDAQ:AZN) at 5.87 percent and argenx SE (NASDAQ:ARGX) at 4.55 percent.
5. Virtus LifeSci Biotech Products ETF (ARCA:BBP)
AUM: US$20.88 million
The Virtus LifeSci Biotech Products ETF tracks the performance of US-listed biotech stocks with at least one drug therapy approved by the US Food and Drug Administration or in the late stages of clinical development.
Over 70 percent of its holdings are in small- and mid-cap stocks and over 85 percent of its holdings are US companies. Its top holdings are Alnylam Pharmaceuticals at 2.64 percent, Mirum Pharmaceuticals (NASDAQ:MIRM) at 2.35 percent and ADMA Biologics (NASDAQ:ADMA) at 2.32 percent.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.