Stocks turned lower this morning following a huge miss on the April jobs report. The Labor Department reported an increase of just 266,000 in April, considerably less than the 1 million payroll jobs that were expected to have been added last month. The Dow erased early gains, but tech stocks jumped as Treasury yields dropped.
One area of the market that can offer hefty returns is biotech. It’s not unheard of for a winning biotech stock to produce 10x or 20x returns in a very short period of time. But biotech companies are difficult to evaluate due to the speculative nature of their technologies, and due to the breadth of knowledge, experience, and education required to understand them. Although this is true for all industries, it is particularly true for biotech.
Specifically, genomics is one niche within the biotech group that could offer unimaginable returns, but the technology is so new and so advanced, many investors shy away from companies that are making astounding advancements.
One solution is to delegate individual stock picking to the professionals. In this article we’ll focus on an exchange-traded fund (ETF) that provides an opportunity for investors who are looking to gain access to companies at the forefront of genomics innovation.
iShares Genomics Immunology and Healthcare ETF (IDNA)
IDNA holds a concentrated portfolio of global companies in the biopharmaceutical and healthcare equipment and services industries that could benefit from the long-term growth and innovation in genomics, immunology and bioengineering. The fund is passively managed and holdings are weighted by market-cap and are constrained such that no individual security exceeds 4% weight of the portfolio. The index rebalances semi-annually.
It’s worth noting that IDNA beat Cathie Woods’ ARK Genomic Revolution ETF (ARKG) in the first ten weeks of 2020, when global markets were rocked by the coronavirus outbreak and investors were eagerly hunting for potential profit in companies researching treatment and vaccines.
- Weighted Average Market Cap $22.53B
- Price / Earnings Ratio -39.69
- Price / Book Ratio 4.76
- YTD Daily Total Return -2.55%
- YTD Return -0.96%
- Yield 0.25%
- Expense Ratio 0.47%
- Net Assets 297.12M
- Number of Holdings 50
- Top Holdings: BioNtech SE BNTX, BeiGene Ltd BGNE, Fate Therapeutics FATE
Of course, compared to other genomics investments, a less risky ETF investment probably won’t provide exponential returns in the near term.
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