3 High Growth Biotech ETFs For 2020
The biotech sector is one of the top performing segments of the market so far in 2020. As companies scramble to develop the next great vaccine or therapy to deal with the coronavirus outbreak, investors have been willing to bid up biotech shares anticipating big revenue and profit growth.
That gives the biotech sector the potential for further big gains in the second half of 2020 in addition to the gains already achieved during the first half. With a below market P/E ratio based on next year's earnings estimates, biotech comes reasonably valued as well.
If you're ready to take a home run swing on biotech during the second half of 2020, here are three high growth ETFs for you to consider.
ARK Genomic Revolution ETF (ARKG)
If you're not familiar with the ARK ETFs, you should be. Their tech and biotech funds have been huge performers pretty much since they launched.
ARKG invests in companies that are expected to substantially benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments and advancements in genomics into their business. Its focuses include targeted therapeutics, bioinformatics and stem cell research.
In 2020, ARKG is up 61% compared to a 19% return for the broader biotech sector.
ALPS Medical Breakthroughs ETF (SBIO)
SBIO targets the more speculative end of the biotech sector. It focuses on companies that have at least one drug in Phase II or Phase III clinical trial and have the cash on hand to support current expenditures for at least 24 months.
Many of these companies have no approved drugs and are living and dying based on the successful approval of their trial drugs. In other words, these are true home run swings whose stock prices will rocket if the drug gets approved but will plunge if they don't. True boom or bust potential.
SBIO hasn't had the biggest year so far as it's virtually flat year-to-date.
Virtus LifeSci Biotech Clinical Trials ETF (BBC)
BBC, as the name suggests, focuses on companies with drugs in clinical trial, much in the same way that SBIO does. It invests solely in firms with promising drugs in clinical human trials that have not yet been approved by the FDA or gone into production.
BBC has had more success this year than SBIO as it's up about 13% on the year. Virtus also offers the Virtus LifeSci Biotech Products ETF (BBP), a fund that targets companies who do have an FDA-approved drug in their lineup.
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