Amid the trying circumstances in the market right now, investors may be well served to target the best biotech ETFs to buy. Fundamentally, these exchange-traded funds benefit from permanent relevance. No matter what’s going on in the economy, scientists will continue pressing forward for medical innovations. Given the practically limitless opportunities available, this sector enjoys massive pertinence.
However, it’s also a volatile arena if you’re choosing individual stocks. While one company can deliver a knockout blow during its clinical trials, many others may fail miserably. To help mitigate the feast-or-famine nature of the underlying industry, the best biotech ETFs to buy offer a broad canvas of highly compelling enterprises. This way, you’re better assured of long-term profitability.
Plus, some evidence exists that healthcare-related names can garner support through volatile market cycles. Again, the search for medical innovations never goes out of style. With that, below are the best biotech stocks to buy for exposure to the healthcare sector.
SPDR S&P Biotech ETF
iShares Biotechnology ETF
Global X Genomics and Biotechnology ETF
ARK Genomic Revolution ETF
iShares Genomics Immunology and Healthcare
ALPS Medical Breakthroughs ETF
Loncar Cancer Immunotherapy ETF
SPDR S&P Biotech ETF (XBI)
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One of the most popular entries among the best biotech ETFs to buy, the SPDR S&P Biotech ETF (NYSEARCA:XBI) benefits from strong volume metrics. According to data from U.S. News & World Report, XBI enjoys volume of 20.8 million shares. Further, the fund owns $6.42 billion worth of net assets. In the trailing year, the ETF declined 4%, paring in half the 8% loss that the S&P 500 index incurred during the same period.
Enticingly, SPDR S&P Biotech ETF covers a wider range of pharmaceutical firms. Its top holding is Madrigal Pharmaceuticals (NASDAQ:MDGL), which represents 3.39% of the fund’s total net assets. Next up is Natera (NASDAQ:NTRA) at 1.52% of net assets, followed by Acadia Pharmaceuticals (NASDAQ:ACAD) at 1.5%.
According to TipRanks, Wall Street analysts peg XBI as a consensus moderate buy. Further, their average price target stands at $143.11, implying 81% upside potential. Finally, XBI’s expense ratio sits at 0.35%. In contrast, the category average pings at 0.57%. Therefore, it’s an intriguing and low-cost candidate for the best biotech ETFs to buy.
iShares Biotechnology (IBB)
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Another popular entry among the best biotech ETFs to buy, iShares Biotechnology (NASDAQ:IBB) likewise benefits from strong volume metrics. Per U.S. News & World Report, IBB sees an average volume of nearly 2.8 million shares. At the moment, the ETF carries $7.91 billion in net assets. Since the start of the new year, IBB slipped over 2%. However, in the past 365 days, it gained nearly 5% of its equity value.
Notably, iShares Biotechnology focuses on the most well-known sector enterprises for its top holdings. Taking the pole position is Gilead Sciences (NASDAQ:GILD), which comprises 8.09% of IBB’s net assets. Slotting in second place stands Regeneron Pharmaceuticals (NASDAQ:REGN), making up 7.89% of the ETF’s net assets. In third place is Vertex Pharmaceuticals (NASDAQ:VRTX), accounting for 7.58%.
According to TipRanks, covering analysts peg IBB as a consensus moderate buy. In addition, their average price target stands at $173.08, implying over 36% capital growth potential. Lastly, IBB’s expense ratio is a bit higher at 0.44%. Still, it ranks below the category average of 0.57%. Therefore, IBB makes an interesting case for the best biotech ETFs to buy.
Global X Genomics and Biotechnology ETF (GNOM)
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A lesser-known but still relatively popular among hardcore biotech enthusiasts, Global X Genomics And Biotechnology ETF (NASDAQ:GNOM) strengths lie in its focus on the exciting field of genomics. Currently, the GNOM ETF features an average volume of 45,961 shares. Since the Jan. opener, GNOM dipped 2%. In the trailing year, the fund gave up over 9% of its market value, reflecting a higher-risk, higher-reward profile.
Regarding its top holdings, coming in the first place is 10X Genomics (NASDAQ:TXG), with a 7.1% allocation of total net assets. In second place stands Sarepta Therapeutics (NASDAQ:SRPT) with a 5.52% allocation. Rounding out the top three is clinical genetic testing company Natera at 5.12%. Geographically, GNOM features modest diversity. Although 89.9% of underlying stocks hail from the U.S., 9% stem from the broader European region. The rest comes from Japan.
According to TipRanks, analysts peg GNOM as a consensus moderate buy. Their average price target stands at $19.74, implying nearly 61% upside potential. Regarding expenses, GNOM is a bit on the pricier side with an expense ratio of 0.5%. Still, if you believe in the genomics field, this could be one of the best biotech ETFs to buy.
ARK Genomic Revolution ETF (ARKG)
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If you want an alternative to the genomics industry, ARK Genomic Revolution ETF (BATS:ARKG) features some advantages. Primarily, it’s one of the larger funds among the best biotech ETFs to buy, with net assets of $1.89 billion. Also, the average volume for AKRG hits 3.9 million shares. Since the January opener, the ETF gained nearly 5% of market value. However, it’s a volatile entry, posting nearly a 27% loss during the past 365 days.
Much of this wildness centers on ARK Genomic’s high-risk, high-reward individual holdings. At the top stands Exact Sciences (NASDAQ:EXAS), commanding 11.71% of ARKG’s total net assets. Sitting in second place is Pacific Biosciences of California (NASDAQ:PACB) with a 5.12% allocation. Coming in third is Schrodinger (NASDAQ:SDGR) at 5.04%. Geographically, the U.S.-dominant ARKG features modest diversification, with companies listed in Europe, Canada, and the U.K.
According to TipRanks, analysts peg AKRG as a consensus moderate buy. Moreover, their average price target stands at $50.37, implying over 74% growth potential. However, one factor to consider for ARKG focuses on its expense ratio. At 0.75%, it’s considerably more expensive than average.
iShares Genomics Immunology and Healthcare ETF (IDNA)
For those that want to go off the beaten path with their best biotech ETFs to buy, iShares Genomics Immunology and Healthcare ETF (NYSEARCA:IDNA) offers an attractive alternate route. To be fair, IDNA ranks on the smaller side of the ETF arena, carrying net assets of only $143.3 million. As well, the average volume sits at 24,123 shares. It’s also volatile, down 26% in the trailing year.
However, it offers a mix of established and aspiration-driven enterprises in its holdings. At the top stands Regeneron Pharmaceuticals with a 4.92% allocation of total net assets. In second place at 4.85% comes Exelixis (NASDAQ:EXEL), which focuses on genomics-based drug discovery. Rounding out the top three is Blueprint Medicines (NASDAQ:BPMC), with a 4.34% net asset allocation. Notably, IDNA offers geographic diversity, with only 61.4% of holdings based in the U.S.
Per TipRanks, covering analysts view IDNA as a consensus moderate buy. Additionally, their average price target stands at $40.94, implying over 74% upside potential. Finally, IDNA’s expense ratio pings at 0.47%. It’s not grossly expensive but it’s not necessarily cheap either.
ALPS Medical Breakthroughs ETF (SBIO)
For greater exposure to medical innovation, speculative investors of the best biotech ETFs to buy may consider the ALPS Medical Breakthroughs ETF (NYSEARCA:SBIO). According to U.S. News & World Report, the ETF targets small and middle-capitalization biotech enterprises that have one more drug in either Phase II or Phase III of the U.S. Food and Drug Administration clinical trials.
While SBIO presents higher-than-average volatility, it’s not too bad. In the past 365 days, SBIO dipped 8%, almost exactly the same performance as the S&P 500 index. Topping the individual holdings list is Roivant Sciences (NASDAQ:ROIV) at 3.85% of total net assets. In the second ping Prometheus Biosciences (NASDAQ:RXDX) at 3.36%. In third place is Alkermes (NASDAQ:ALKS) at 2.96%.
Per TipRanks, Wall Street analysts view SBIO as a consensus moderate buy. Their average price target stands at $54.62, implying almost 92% upside potential. Lastly, SBIO’s expense ratio of 0.5% comes in just under the category average of 0.57%. Still, for maximum upside potential, few might be as enticing as SBIO.
Loncar Cancer Immunotherapy ETF (CNCR)
To conclude this list of best biotech ETFs to buy, market speculators may consider Loncar Cancer Immunotherapy ETF (NASDAQ:CNCR). According to U.S. News & World Report, the Loncar Cancer ETF features approximately 30 stocks where the underlying enterprises focus on the development of drugs that harness the immune system’s power to fight cancer. As a specialty fund, it suffers from volatility, shedding over 8% of its value since the Jan. opener.
Still, for those that like to roll the dice, Loncar could be intriguing for its individual picks. Topping the list is RAPT Therapeutics (NASDAQ:RAPT), commanding 6.23% of the fund’s total net assets. Next up is Merus (NASDAQ:MRUS) with an allocation of 5.63%. Rounding out the top three sits Janux Therapeutics (NASDAQ:JANX) at 4.3%. Conspicuously, CNCR enjoys geographic diversity, with only 71.6% of the holdings hailing from the U.S.
According to TipRanks, analysts peg CNCR as a consensus moderate buy. Moreover, their average price target stands at $24.30, implying nearly 93% upside potential. Finally, CNCR’s expense ratio pings on the high side at 0.79%. Still, if a few of the underlying enterprises deliver the goods, Loncar could fly.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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