Taking a position in a life science exchange-traded fund (ETF)provides exposure to a basket of stocks focused on the healthcare sector, while mitigating the risks of holding shares in a single company.
While ETFs provide diversification by their nature, fund managers often narrow down their offerings to follow a specific aspect of the market — for example, biotech or pharma. They also typically adjust the weight of ETF holdings to match movements in the life science industry in an effort to give investors the best possible returns.
There are many choices when it comes to life science ETFs, and to help investors understand their options, the Investing News Network has listed the top life science ETFs by year-on-year performance.
Data was gathered on January 11, 2024, and the 10 life science ETFs listed by ETFdb.com were considered. Read on to learn more about the top-performing life science ETFs over the past 12 months.
1. SPDR Biotech ETF (ARCA:XBI)
Year-on-year gain: 10.73 percent
Launched in 2006, the SPDR Biotech ETF tracks the performance of the S&P Biotechnology Select Industry Index, focusing exclusively on US stocks. The fund has an expense ratio of 0.35 percent, and its five year return comes in at 2.8 percent. Over the past three months, the ETF has posted a return of 29.14 percent.
The SPDR Biotech ETF has total assets under management of more than US$7.29 billion. Of its 123 holdings, 41.74 percent are mid-cap companies and 39.27 percent are small-cap companies. The fund’s top holdings include Cytokinetics (NASDAQ:CYTK), Karuna Therapeutics (NASDAQ:KRTX) and Arrowhead Pharmaceuticals (NASDAQ:ARWR).
2. iShares Global Healthcare ETF (ARCA:IXJ)
Year-on-year gain: 7.36 percent
The iShares Global Healthcare ETF offers investors exposure to life science companies on a global scale, but it is still dominated by US firms. Founded in 2001, the fund’s expense ratio is 0.42 percent. Its five year return comes in at 10.64 percent and in the past three moths it’s posted a return of 8.49 percent.
With 115 holdings, this ETF has total assets under management of more than US$4.14 billion. It is primarily focused on North American companies, although it has exposure to some international firms in Europe and Asia Pacific. Its top holdings include Eli Lilly (NYSE:LLY), UnitedHealth Group (NYSE:UNH) and Johnson & Johnson (NYSE:JNJ).
3. ARK Genomic Revolution ETF (ARCA:ARKG)
Year-on-year gain: 6.65 percent
The ARK Genomic Revolution ETF was launched in 2014 and has total assets under management of nearly US$2.2 billion. The fund’s five year return stands at 4.44 percent, and in the past three moths it has posted a return of 23.16 percent. The ARK Genomic Revolution ETF has an expense ratio of 0.75 percent.
With only 42 holdings, this fund is much smaller than the other ETFs on this list. Its top holdings include Exact Sciences (NASDAQ:EXAS), CRISPR Therapeutics (NASDAQ:CRSP) and Recursion Pharmaceuticals (NASDAQ:RXRX).
4. Health Care Select Sector SPDR Fund (ARCA:XLV)
Year-on-year gain: 6.54 percent
The Health Care Select Sector SPDR Fund has 65 holdings, and its total assets are valued at more than US$39.6 billion. ETFdb.com describes the ETF as “one of the most popular options for gaining exposure to the U.S. health care sector,” and “an attractive option for investors looking to tilt exposure towards lower risk industries.”
This ETF focuses mainly on health technology and is dominated by major pharmaceutical companies. Its top holdings include firms such as Eli Lilly, UnitedHealth Group and Johnson & Johnson. In the last five years, this ETF has had a 12.02 percent investment return, with an 8.54 percent return over the past three months.
5. Vanguard Health Care Index Fund ETF (ARCA:VHT)
Year-on-year gain: 6.32 percent
The Vanguard Health Care Index Fund ETF has the most holdings on this list at 419, including Johnson & Johnson, UnitedHealth Group and Pfizer (NYSE:PFE). The ETF’s expense ratio is very low at 0.1 percent.
This is a broad fund with healthcare firms from varied industries. Its total assets under management are US$17.13 billion, and it’s achieved returns of 11.2 percent over the last five years and 9.32 percent over the last three months.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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