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Biotechnology companies use living organisms and molecular biology to produce a broad range of products, including medicine and pharmaceuticals. The biotechnology sector has attracted heightened attention in 2021 as the industry produces emerging vaccines, treatments, and biomedical devices to address with the global COVID-19 pandemic. As a result, some of these companies have seen explosive revenue and profit growth. Well-known biotechnology companies include Moderna, Agios Pharmaceuticals Inc. (AGIO) and CRISPR Therapeutics AG (CRSP).
Investors who expect biotech companies to continue to grow in in 2022 may be interested in mutual funds focused on the biotech sector. These biotechnology mutual funds provide professionally managed exposure to the sector. They help minimize costs while investing in a broad range of stocks in biotech, pharmaceuticals, and healthcare.
- Biotechnology mutual funds have significantly underperformed the benchmark Morningstar US Healthcare TR index in the past year.
- Three leading biotech mutual funds ranked by one-year trailing total return are FBTAX, FBIOX, and FBDIX.
- The top holdings of these funds are AbbVie Inc., Gilead Sciences Inc., and Regeneron Pharmaceuticals Inc., respectively.
We look at three biotechnology mutual funds as ranked by their one-year trailing total return (TTM) as of the close of market on Dec. 16, 2021. All three of these funds focus on bio tech firms, and all significantly underperformed the benchmark Morningstar US Healthcare TR, which provided one-year trailing total returns of 18.9%. The broader health category provided total returns of 5.3% over the same period. This performance data and all figures below are as of Dec. 17, 2021.
- 1-Year Trailing Return: -6.0%
- Expense Ratio: 1.01%
- Trailing-Twelve-Month (TTM) Dividend Yield: 0.38%
- Assets Under Management: $2.4 billion
- Inception Date: Dec. 27, 2000
FBTAX is managed by Eirene Kontopoulos. The fund invests at least 80% of assets in companies engaged in the research, development, manufacture, and distribution of biotechnological products, services, and processes, and companies that benefit significantly from scientific and technological advances in biotechnology. Nearly 92% of assets are invested in biotechnology companies, with pharmaceuticals companies making up most of the remainder. The fund invests in a blend of value and growth stocks. The top holdings include AbbVie Inc. (ABBV), Regeneron Pharmaceuticals Inc. (REGN), and Vertex Pharmaceuticals Inc. (VRTX), all of which are biopharmaceutical or biotechnology companies.
- 1-Year Trailing Return: -14.6%
- Expense Ratio: 0.70%
- Trailing-Twelve-Month (TTM) Dividend Yield: 0.17%
- Assets Under Management: $7.0 billion
- Inception Date: Dec. 16, 1985
FBIOX is managed by Rajiv Kaul. The fund typically invests at least 80% of its assets in companies engaged in the research, development, manufacture, and distribution of biotechnological products, services, and processes and companies that benefit significantly from scientific and technological advances in biotechnology. Nearly 89% of assets are invested in biotechnology companies, with the bulk of the remainder targeting pharmaceuticals companies. The fund’s top holdings include Gilead Sciences Inc. (GILD), Moderna Inc. (MRNA), and AbbVie Inc., all of which are biopharmaceutical and technology companies.
- 1-Year Trailing Return: -19.5%
- Expense Ratio: 0.98%
- Trailing-Twelve-Month (TTM) Dividend Yield: 0.00%
- Assets Under Management: $1.1 billion
- Inception Date: Sept. 15, 1997
FBDIX is managed by Evan McCulloch, Wendy Lam, and Akiva Felt. The fund typically invests at least 80% of its assets in securities of biotechnology companies and discovery research firms including those involved in fields such as genomics, genetic engineering, and gene therapy, as well as health care, pharmaceuticals and agriculture. Nearly 90% of assets are invested in U.S.-based companies, with the remainder divided among companies based in Denmark, the Netherlands, the U.K., and several other countries. The fund invests in a blend of value and growth stocks. The top holdings include Regeneron Pharmaceuticals Inc., Amgen Inc. (AMGN), and Horizon Therapeutics PLC (HZNP). The first two of these are U.S.-based biopharmaceutical companies, and the third is an Ireland-based biopharmaceutical company.
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