The life science sector certainly holds a risk factor, and ETFs are a good way to enter the industry more safely than by investing in potentially risky small-cap stocks. A key advantage is that even if one company in the group takes a hit, the impact will be less direct.
Below the Investing News Network takes a look at five small biotech ETFs for investors to consider. They were selected using ETFdb.com and their total assets under management (AUM) were under US$100 million as of May 18, 2021. All other figures were also current as of that date.
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1. Loncar Cancer Immunotherapy ETF (NASDAQ: CNCR )
AUM: US$42.19 million
The Loncar Cancer Immunotherapy ETF was launched in October 2015, and tracks 32 holdings focused on cancer therapies that use the body’s own immune system. Of its holdings, the majority are small caps in the clinical-stage biotech sector, with a handful of large-cap immunotherapy leaders.
The top five biotech stocks in this ETF are I-MAB (NASDAQ: IMAB ) at 6.07 percent; BioNTech (NASDAQ: BNTX ) at a 5.57 percent weight; BeiGene (NASDAQ: BGNE ) with a 5.19 percent weightage; MacroGenics (NASDAQ: MGNX ) at 4.88 percent; and Gilead Sciences (NASDAQ: GILD ) at 4.16 percent.
2. Virtus LifeSci Biotech Clinical Trials ETF (ARCA: BBC )
AUM: US$40.63 million
This fund tracks biotech companies that are listed in the US and have lead drugs in clinical trials. ETF.com refers to it as a “high-risk and high-reward bet” with a specific focus.
There are 160 holdings included in this biotechnology fund, which came to market in December 2014. Its top holdings are Amyris (NASDAQ: AMRS ), weighing 2.66 percent; Rubius Therapeutics (NASDAQ: RUBY ) at a weight of 2.08 percent; Prothena (NASDAQ: PRTA ), weighing 1.28 percent; BioCryst Pharmaceuticals (NASDAQ: BCRX ) at 1.16 percent in weight; and I-MAB, clocking in at 1.14 percent.
3. iShares Evolved US Innovative Healthcare ETF (BATS: IEIH )
AUM: US$35.85 million
The iShares Evolved US Innovative Healthcare ETF tracks US-listed pharmaceutical and biotechnology companies with exposure to innovations in the healthcare sector. This BlackRock-issued fund is fairly new and invests at least 80 percent of its assets in large-, mid- and small-cap companies.
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There are 250 holdings included in this biotechnology fund, which was launched in March 2018. Its top holdings are Johnson & Johnson (NYSE: JNJ ), weighing 10.3 percent; Pfizer (NYSE: PFE ), weighing 6.35 percent; AbbVie (NYSE: ABBV ), weighing 6.26 percent; Merck & Co. (NYSE: MRK ), weighing 6.26 percent; and Ely Lilly and Company (NYSE: LLY ), weighing 5.18 percent.
4. Virtus LifeSci Biotech Products ETF (ARCA: BBP )
AUM: US$28.27 million
The Virtus LifeSci Biotech Products ETF offers investors access to a portfolio of biotech product companies that have a minimum of one drug therapy approved by the US Food and Drug Administration.
With 48 companies in its portfolio, the ETF’s top five holdings are BioNTech (NASDAQ: BNTX ), which holds a weight of 3.92 percent; Agios Pharmaceuticals (NASDAQ: AGIO ) with a weight of 3.54 percent; BeiGene (NASDAQ: BGNE ) at 3.23 percent; Intra-Cellular Therapies (NASDAQ: ITCI ) at 3.23 percent; and Vanda Pharmaceuticals (NASDAQ: VNDA ) at 3.06 percent. It was initiated in December 2014.
5. Defiance NASDAQ Junior Biotechnology ETF (NASDAQ: IBBJ )
AUM: US$7.32 million
Launched in August 2020, the Defiance NASDAQ Junior Biotechnology ETF is the newest ETF on the list. It tracks the total return performance of the NASDAQ Junior Biotechnology Index, offering investors liquid, transparent and low-cost exposure to junior biotechnology and pharmaceutical companies.
With 237 companies in its portfolio, the ETF’s top five holdings are Zai Lab (NASDAQ: ZLAB ), which holds a weight of 2.85 percent; BridgeBio Pharma (NASDAQ: BBIO ) with a weight of 2.49 percent; Fate Therapeutics (NASDAQ: FATE ) at 2.21 percent; ImmunityBio (NASDAQ: IBRX ) at 1.96 percent; and Medpace Holdings (NASDAQ: MEDP ) at 1.79 percent.
This is an updated version of an article originally published by the Investing News Network in 2015.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.