This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Biotech Funds: Enter With Care

Take the (FBIOX) Fidelity Select Biotechnology fund. It has the lowest expense ratio, 0.97%, of the 10 funds and a better performance for the year to date, last three years and past five years. The five-year return is a loss of 0.21%, but that's up against the average loss of 1.33%.

Manager Rajiv Kaul ran the Select Biotech during the late 1990s, when the fund exploded higher under his tenure. However, when he assumed control of two midcap growth funds, his performance was unimpressive. One fund badly trailed its peers, and another simply matched the performance of those in its category, according to Morningstar.

Kaul has decreased his exposure to some of the largest holdings in Select Biotech while spreading the wealth around to some smaller names such as Myogen (MYOG), which makes therapies for cardiovascular disease.

Despite the manager's track record in nonbiotech funds, Fidelity's offering is probably the best of the group because of its low cost and manager's experience.

Unfortunately, the other decent funds have sky-high loads or minimum investments. (ETHSX) Eaton Vance Worldwide Health Science sports a 5.75% load and a 1.56% expense ratio, meaning you would need to be a long-term holder to make this one worth your while. Over the past five years, the fund has gained 3.06%. Only three out of eight funds with five-year track records have advanced over that time period.

The Eaton Vance fund is 70% invested in biotech, and the rest is in pharmaceutical makers like Novartis (NVS) and Schering-Plough (SGP).

The key to Eaton Vance's success is manager Sam Isaly, who heads Orbimed Advisors. Isaly has been investing in health care companies for nearly four decades. He runs hedge and private equity funds along with the Eaton Vance fund. While allocating his share of assets to the large-caps such as Amgen and Genentech, the manager prefers to invest in smaller names that may not even have products in the marketplace.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,822.66 -220.24 -1.29%
S&P 500 1,948.79 -23.50 -1.19%
NASDAQ 4,423.2090 -70.1810 -1.56%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs