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Lior Vider
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Lior Vider, is the Founder, Owner and Chairman of, and working as an investment portfolio manager, at Epsilon Investment House. Lior is a Registered Investment manager with the ISA (Israel Securities Authority). He has more than 13 years of experience as a investment portfolio... More
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  • Best Investment Options For The Biotechnology Sector 2 comments
    Mar 31, 2014 9:27 AM | about stocks: XBI, PBE


    • Bio-technology ETFs have seen Impressive returns in the past years.
    • This is why you need to consider also investing in the Bio-technology sub-sector.
    • A good look at two Bio-technology ETFs: XBI, and PBE.

    The Biotechnology sector consists of companies that develop biological drugs. Biotechnology stocks tend to be more volatile than the broad market. The Sector had a scientific breakthrough and is now the front of science. However, it is still not plowed field and peripheral innovations and advancements that can make in the biologics drugs is enormous. Some of the companies listed above possess innovative medicines that change the face of medicine and holds the solution to diseases that were previously incurable (for example GILEAD , which is expected to launch a drug for hepatitis C) . This field is (hopefully) the key to solving the most serious diseases confronting mankind. Against this background, these ETFs that invest in this area execute a big rally in 2013, but even after a the huge gains , the potential of these companies leaves my opinion of the area Optimistic for the future.

    This is a list of all of the Biotechnology ETFs traded in the USA:

    (click to enlarge)

    These are my two preferred ETF's to invest in the Bio-technology sub-sector:


    This ETF has 71 stocks in its portfolio, The 10 top holdings are 26.88% and the currently top holding is Intercept Pharmaceuticals Inc. (ICPT) accounting for only 7.82% of its holdings.

    The SPDR S&P Biotech ETF seeks to provide investment results that before fees and expenses, correspond generally to the total return performance of the S&P Biotechnology Select IndustryTM Index. Some of the top other components include InterMune Inc (ITMN), ARIAD Pharmaceuticals Inc (NASDAQ:ARIA), and Sangamo BioSciences Inc (SGMO).

    XBI has an reasonableexpense ratio of 0.35%.

    Fund total net assets: 1.4$ billion, Inception date - 2006

    The fund has a year-to-date return of 11.94%, a one-year return of 26.27%, a three-year return of 99.52% and a five-year return of 145.67%.

    PowerShares Dynamic Biotechnology & Genome Portfolio ETF (NYSEARCA:PBE)

    This ETF has 30 stocks in its portfolio, The 10 top holdings are 43.40% and the currently top holding is Biogen Idec Inc (NASDAQ:BIIB) accounting for only 5.11% of its holdings.

    The PowerShares Dynamic Biotechnology & Genome ETF is based on the Dynamic Biotechnology & Genome Intellidex Index. The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.Some of the top components include Illumina Inc (NASDAQ:ILMN), Amgen (NASDAQ:AMGN), Gilead Sciences (NASDAQ:GILD) and Biogen (BIIB).

    PBE has an expense ratio of 0.63%.

    Fund total net assets: 460$ million, Inception date - 2005

    The fund has a year-to-date return of 11.94%, a one-year return of 26.27%, a three-year return of 99.52% and a five-year return of 145.67%.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: XBI, PBE
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Comments (2)
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  • Urbannek
    , contributor
    Comments (1525) | Send Message
    Fidelity Select Biotechnolgy built my retirement wealth. 20 years of set it and forget it. Still like the sector for growth although I am now entering the income phase of my investing life. Just wondering what you think of it?
    4 Apr 2014, 01:59 AM Reply Like
  • Lior Vider
    , contributor
    Comments (2) | Send Message
    Author’s reply » thank you for comment.
    it depends on the weight that this setsor is from all your invesment portfolio, you need to have tolerance with investments in this sector, but I think the negative trend expected to end soon, and the stocks prices will be attractive in the long term mainly because of these reasons:


    • An increase in life expectancy of the population


    • An increase in expenses on drugs


    • An increase (unfortunate) in the volume of major diseases (cancer and diabetes)


    • An increase in medical consumers in developing countries that constitutes a powerful engine for growing industry


    • An increase in new drug launches and pipeline drugs of the major ethical drug companies - some drugs are a scientific breakthrough


    • An essential increase in the volume of approvals of the FDA


    • A decrease in the volume of patent expirations (good for most ethical companies that the index consists of them)


    • An increase in revenues of drug development against orphan diseases with regulatory encouragement
    4 Apr 2014, 03:19 AM Reply Like
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