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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$83.94 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 Gilead Sciences (NASDAQ:GILD) at a 6.35 percent weight, Amgen (NASDAQ:AMGN) at 5.6 percent and Vertex Pharmaceuticals (NASDAQ:VRTX) at 5.45 percent.
2. Tema Obesity and Cardiometabolic ETF (NASDAQ:HRTS)
AUM: US$82.54 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 47 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 Amgen at 8.06 percent, Eli Lilly and Company (NYSE:LLY) at 5.53 percent and Alnylam Pharmaceuticals (NASDAQ:ALNY) at 5.36 percent.
3. Global X Genomics & Biotechnology ETF (NASDAQ:GNOM)
AUM: US$82.22 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 at a weight of 6.79 percent, Avidity Bioscience (NASDAQ:RNA) with a weight of 5.67 percent and Natera (NASDAQ:NTRA) at 5.13 percent.
4. Direxion Daily S&P Biotech Bear 3x Shares (NYSEARCA:LABD)
AUM: US$80.78 million
The Direxion Daily S&P Biotech Bear 3x Shares ETF is designed to provide three times the daily return of the inverse of the S&P Biotechnology Select Industry Index, meaning that it rises in value when the index falls and falls in value when it rises. Leveraged inverse ETFs are designed for short-term trading and are not suitable to hold long-term. They also carry a high degree of risk as they can be significantly affected by market volatility.
The top three holdings in this ETF are Sarepta Therapeutics (NASDAQ:SRPT) with a weight of 3.32 percent, United Therapeutics (NASDAQ:UTHR) with a weight of 2.98 percent and Alnylam Pharmaceuticals with a weight of 2.87 percent.
5. Tema Oncology ETF (NASDAQ:CANC)
AUM: US$48.83 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, there are 50 holdings in this biotechnology fund, with about 46 percent being small- to mid-cap stocks and 4.6 percent micro stocks. Among its top holdings are AstraZeneca (NASDAQ:AZN) at 5.65 percent, Regeneron Pharmaceuticals (NASDAQ:REGN) at a weight of 5.47 percent and Amgen at 4.96 percent.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.