4 Best-Performing Biotech Mutual Funds In 2019 So Far

After stumbling into the bear market territory in the second half of last year, the U.S. biotechnology sector recovered in the first six months of this year. SPDR S&P Biotech ETF (XBI), iShares Nasdaq Biotechnology ETF (IBB), ProShares Ultra Nasdaq Biotechnology ETF (UBIO) and the Nasdaq Biotechnology Index have surged 18.2%, 8.7%, 14.5% and 8.7%, respectively, in the year-to-date (YTD) period.

Historically, the space has been risky from investors’ standpoint. This is because they bet on the assumption that products in the pipeline would turn out be highly successful. But any failure in a key clinical trial can make things really unpleasant for investors. Nonetheless, a higher number of mergers and acquisitions (M&A) and an increased number of FDA approvals have been pivotal in shaping up the fortunes for the biotech sector. Let’s look at some of the best-performing mutual funds from the space so far in 2019.

A Banner Year for Biotech

So far this year, 25 of the 32 healthcare IPOs have been from the biotech sector. Furthermore, the average first-day return from such offerings has been 9% so far. The most successful biotech IPOs this year have been Turning Point Therapeutics, Inc. (TPTX) and Cortexyme, Inc. (CRTX). Shares of Turning Point and Cortexyme have risen 100% since they went public in April and May, respectively.

Moreover, June turned out to be the best month for biotech IPOs, with six biotech companies going public in a week’s time in mid-June. BridgeBio Pharma, Inc. and Adaptive Biotechnologies Corporation went public in the month and had successful IPOs. Both companies have a market cap of over $3 billion.

The trend began early in the year when pharmaceutical giant Bristol-Myers Squibb offered in January $74 billion to acquire cancer drugmaker Celgene. Following this, Eli Lilly and Company acquired Loxo Oncology for $8 billion in February.

4 Best Funds to Buy Now

Given such bullish circumstances, we have highlighted four biotech mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to gain from such factors. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.

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