One area of the market where stocks can be found to produce 10x, even 20x returns, regardless of what’s happening elsewhere, is biotech. Looking at the performance of the past ten years, if the biotechnology industry were a sector, it would be the best performing one. Over the past decade, biotech stocks have returned 524%. That beats every last sector, it beats the broader health care sector by 200 percentage points, and it’s nearly double the S&P 500’s total return in that same time frame.
There’s clearly money to be made in the discovery of new treatments for anything from the flu to cancer. But biotech stocks carry substantial risk. While positive data from a drug trial could send their stocks soaring, a setback or failure can crush their returns, making them difficult buy-and-hold investments.
Today we’re highlighting a rare, buy-and-hold biotech investment that provides ground floor access to the innovators of tomorrow, along with their potential nose-bleed returns, while minimizing risk.
For those looking for a long-term investment in biotech with less risk, biotech ETFs offer an answer. Instead of betting on individual drugs or companies, an ETF allows you to spread out risk across dozens or even hundreds of firms at a time.
The Principal Healthcare Innovators ETF (BTEC) is a promising fund geared toward finding smaller, innovative companies that might get overlooked, with a focus on active investment in early-stage R&D.
BTEC seeks out health care firms from the Nasdaq US Benchmark Index but excludes the top 150 securities by market size while excluding companies with low trading liquidity. How it identifies “innovators,” however, might seem a little unorthodox: Specifically, it seeks out “non-earners by means of having negative earnings over the prior 4, prior 8 or future 4 quarters at least half of the time.” In other words, it selects companies with inconsistent or negative profits, the idea being that, for now, they’re pouring every last cent into R&D.
BTEC then picks the best-ranked 150 to 200 companies based on its scoring measures, then weights those stocks by size, with no stock exceeding 3% in rebalancing, which happens twice a year. At the moment, Moderna is the top, holding at 5.2% of assets by virtue of its gains since the last rebalancing.
- Net Assets — $89.98 million
- Yield — 0.00%
- Expense Ratio — 0.42%
BTEC also holds BioMarin Pharmaceutical (BMRN), Seattle Genetics (SGEN), and Exact Sciences (EXAS), among others.
Should you invest in BTEC right now?
Before you consider buying BTEC, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not BTEC.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
Click here to watch his presentation, and decide for yourself...
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Click here to find out the name and ticker of Keith's #1 pick...
