As the spread of the coronavirus accelerates across the globe, the vaccine race is well underway. There’s a thrill associated with investing in biotech. Many companies are developing new drugs that could dramatically change how diseases are treated. Some are even working on potential cures. Seemingly every week brings news with the potential to send some stocks soaring (and sometimes sinking, too).
The U.K. began administering the first COVID-19 vaccines to the public on December 8th, after becoming the first country in the world to approve one from Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX). The first recipient was Margaret Keenan, who turns 91 next week. The first 800,000 doses in Britain are going to people over 80 who are either hospitalized or already have outpatient appointments scheduled, along with nursing home workers. U.S. and EU authorities are also reviewing the vaccine, alongside rival products developed by Moderna (NASDAQ:MRNA), and a collaboration between Oxford University and drug maker AstraZeneca (NASDAQ:AZN).
So, how can I invest in the vaccine race today?
If you want to invest in biotech stocks, you certainly have options. Keep in mind that selecting a handful of individual companies, including even large, highly successful ones such as Biogen (NASDAQ: BIIB) and Gilead Sciences (NASDAQ: GILD), can be quite speculative and fairly risky. However, there’s a more diversified alternative that you may not have heard much about: the biotech-focused, SPDR S&P Biotech ETF (NYSE: XBI). This ETF is currently outperforming Biogen and Gilead and is an integral component of the ‘Demand Vaccine’ portfolio.
Of course, only looking at a nine-month period could be misleading. How has XBI held up against the big biotech stocks over the last five years? Again, it’s no contest.
XBI has been available to investors since 2006 and now has more than $5.2 billion in assets under management. It tracks the total return of the S&P Biotechnology Select Industry Index and is also primarily equally weighted. This means that stocks of companies with bigger market caps don’t dominate the index, which allows for more opportunistic balance. It currently holds positions in 140 biotech stocks. None of these individual companies make up more than 1.9% of the ETF’s total holdings.
Why Demand Vaccine?
The ‘Demand Vaccine’ portfolio has focused exposure within the biotechnology industry and is also globally diversified across various other sectors. The portfolio is designed to be a comprehensive investment solution with an overweight to vaccine opportunities. So, although a significant portion is allocated to the biotech industry, we also ensure that your portfolio is internationally diverse, reducing volatility, if the medical advancement sector happens to underperform.
If you would like to invest in the rapidly evolving biotech/vaccine universe, while maintaining global, multi-sector investment exposure, open an account or schedule a video conference with one of our advisors today!
This report is a publication of Demand Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.