5 Best Biotech ETFs To Buy

In this article, we discuss 5 best biotech ETFs to buy. If you want to read our detailed discussion on the biotech industry, head over to 12 Best Biotech ETFs To Buy. 

5. Fidelity MSCI Health Care Index ETF (NYSE:FHLC)

5-Year Performance as of August 4: 42.62%

Fidelity MSCI Health Care Index ETF (NYSE:FHLC) has a broad focus on the entire US healthcare market, encompassing over 300 large, mid, and small-cap companies across more than 10 subsectors. It tracks the MSCI USA IMI Health Care 25/50 Index as its underlying benchmark. Fidelity MSCI Health Care Index ETF (NYSE:FHLC) was launched on October 21, 2013, and as of August 1, 2023, it holds total net assets of $3.08 billion, with an expense ratio of 0.08%. Fidelity MSCI Health Care Index ETF (NYSE:FHLC) is one of the best biotech ETFs to invest in. 

Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company involved in the discovery, development, and marketing of human pharmaceuticals worldwide. Eli Lilly and Company (NYSE:LLY) is a prominent holding of Fidelity MSCI Health Care Index ETF (NYSE:FHLC). On June 26, the company declared a quarterly dividend of $1.13 per share, in line with previous. The dividend is payable on September 8, to shareholders of record as of August 15. 

According to Insider Monkey’s first quarter database, 72 hedge funds were bullish on Eli Lilly and Company (NYSE:LLY), compared to 76 funds in the preceding quarter. 

Baron Health Care Fund made the following comment about Eli Lilly and Company (NYSE:LLY) in its second quarter 2023 investor letter:

“Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company developing and marketing drugs in oncology, diabetes, Alzheimers, immunology, and other diseases. Shares climbed due to continued investor excitement around novel weight loss drugs in the GLP-1 class, including Lilly’s Mounjaro. Given demand that is orders of magnitude more than supply, the full potential of the GLP-1 class of drugs remains unclear, with sales projections eclipsing $100 billion. This number would set a new industry record by a large margin. Drug development in this space is understandably fierce, and as recently as late June, Eli Lilly revealed new data from its diabetes/obesity pipeline assets that will further enhance the value proposition offered to patients. We retain conviction.

In pharmaceuticals, our largest investment continues to be in Eli Lilly and Company. Lilly’s new diabetes drug Mounjaro is on track to be FDA approved for obesity in 2023. At a medical conference in June, Lilly announced Phase 2 clinical data for a next-generation obesity drug called retatrutide, which showed the drug achieved up to 17.5% mean weight loss at 24 weeks in adults with obesity and up to 24.2% mean weight loss at 48 weeks. Lilly also announced Phase 2 clinical data showing its once daily oral drug orforglipron achieved up to 14.7% mean weight loss at 36 weeks in adults with obesity. The results from these pipeline obesity medicines confirmed Lilly’s status as a market leader in the diabetes and obesity category. Also during the quarter, Lilly announced that its drug Donanemab slowed cognitive and functional decline in a Phase 3 study in people with early symptomatic Alzheimer’s disease. We continue to think the company should be able to grow revenue and earnings at attractive rates through the end of the decade and beyond.”

4. Vanguard Health Care Index Fund (NYSE:VHT)

5-Year Performance as of August 2: 43.34%

Vanguard Health Care Index Fund (NYSE:VHT) aims to replicate the performance of the Spliced U.S. Investable Market Health Care 25/50 Index, which serves as a benchmark for gauging the investment returns of healthcare stocks. This ETF follows a passive management strategy, employing a full-replication approach. As of December 21, 2022, the expense ratio for Vanguard Health Care Index Fund (NYSE:VHT) is 0.10%. The fund was launched on January 26, 2004. It is one of the best biotech ETFs to invest in. 

American multinational pharmaceutical and biotechnology corporation, Pfizer Inc. (NYSE:PFE), is one of the top holdings of Vanguard Health Care Index Fund (NYSE:VHT). On August 1, Pfizer Inc. (NYSE:PFE) reported a Q2 non-GAAP EPS of $0.67, beating market consensus by $0.09. However, the revenue of $12.7 billion declined 54.1% on a reported basis and missed Street estimates by $700 million. 

According to Insider Monkey’s first quarter database, Pfizer Inc. (NYSE:PFE) was part of 73 hedge fund portfolios, compared to 75 in the prior quarter. Cliff Asness’ AQR Capital Management is the biggest stakeholder of the company, with 9.3 million shares worth $380.2 million.

Diamond Hill Capital made the following comment about Pfizer Inc. (NYSE:PFE) in its Q3 2022 investor letter:

“Also among our bottom contributors were health care products manufacturer Abbott Labs, global pharmaceutical company Pfizer Inc. (NYSE:PFE), media and technology giant Alphabet, and insurance company American International Group (AIG). Although Pfizer continues to report strong performance of its core drugs, sales of its COVID vaccine and treatment have likely peaked and sales are expected to decline going forward. We remain optimistic about the company long term as we believe management is taking the company in the right direction, focusing R&D, and making strategic acquisitions with profits generated from COVID vaccine sales.”

3. iShares U.S. Healthcare ETF (NYSE:IYH)

5-Year Performance as of August 4: 45.71%

iShares U.S. Healthcare ETF (NYSE:IYH)’s primary objective is to mirror the performance of the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index, which consists of U.S. healthcare sector equities. This ETF provides investors exposure to domestic stocks of companies involved in healthcare equipment and services, pharmaceuticals, and biotechnology. The fund was established on June 12, 2000, and as of August 2, 2023, it holds net assets amounting to $3.18 billion, with an expense ratio of 0.39%. iShares U.S. Healthcare ETF (NYSE:IYH) is one of the best biotech ETFs to buy. 

One of iShares U.S. Healthcare ETF (NYSE:IYH)’s top holdings is Johnson & Johnson (NYSE:JNJ), an American pharmaceutical giant. On July 20, Johnson & Johnson (NYSE:JNJ) reported a Q2 non-GAAP EPS of $2.80 and a revenue of $25.53 billion, outperforming Wall Street estimates by $0.18 and $860 million, respectively. 

According to Insider Monkey’s first quarter data, 86 hedge funds were long Johnson & Johnson (NYSE:JNJ), compared to 84 funds in the last quarter. D E Shaw is a prominent stakeholder of the company, with 3.9 million shares worth $608.7 million. 

ClearBridge Large Cap Value Strategy made the following comment about Johnson & Johnson (NYSE:JNJ) in its first quarter 2023 investor letter:

“The tech-dominated quarter was a headwind for both defensive and cyclical sectors, with shares of health care holdings such as UnitedHealth Group (UNH), Elevance (ELV) and Johnson & Johnson (NYSE:JNJ) declining after a strong 2022.”

2. Health Care Select Sector SPDR Fund (NYSE:XLV)

5-Year Performance as of August 4: 48.24%

Health Care Select Sector SPDR Fund (NYSE:XLV) seeks to achieve investment results that closely align with the price and yield performance of the Health Care Select Sector Index. This ETF aims to offer targeted exposure to companies operating in healthcare-related industries, including pharmaceuticals, health care equipment and supplies, health care providers and services, biotechnology, life sciences tools and services, and health care technology. The fund was established on December 16, 1998, and has a low expense ratio of 0.10%. Health Care Select Sector SPDR Fund (NYSE:XLV)’s portfolio consists of 65 stocks.

AbbVie Inc. (NYSE:ABBV) is a top holding of Health Care Select Sector SPDR Fund (NYSE:XLV). On July 27, AbbVie Inc. (NYSE:ABBV) reported Q2 non-GAAP earnings per share of $2.91, beating market consensus by $0.10. The revenue of $13.87 billion also outperformed Street estimates by $350 million. 

According to Insider Monkey’s first quarter database, 75 hedge funds were bullish on AbbVie Inc. (NYSE:ABBV), compared to 73 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 2.26 million shares worth $360.8 million. 

Baron Health Care Fund made the following comment about AbbVie Inc. (NYSE:ABBV) in its second quarter 2023 investor letter:

“Apart from stock selection, the Fund also benefited from its lower exposure to AbbVie Inc. (NYSE:ABBV), whose shares were down almost 15% in the Benchmark due to concerns about the company’s growth profile after the loss of exclusivity for lead drug Humira. We exited our position during the quarter. We sold AbbVie Inc. due to our less optimistic view of the company’s pipeline and long-term growth profile.”

1. Invesco S&P 500 Equal Weight Health Care ETF (NYSE:RSPH)

5-Year Performance as of August 4: 52.48%

Invesco S&P 500 Equal Weight Health Care ETF (NYSE:RSPH) tracks the S&P 500 Equal Weight Health Care Index, which evenly distributes the weight of stocks within the healthcare sector of the S&P 500 Index. This ETF was established in 2006 and as of August 2, 2023, it has a 30-day SEC yield of 0.69% and an expense ratio of 0.40%. Invesco S&P 500 Equal Weight Health Care ETF (NYSE:RSPH) is one of the best biotech ETFs to buy. 

Bio-Rad Laboratories, Inc. (NYSE:BIO) is a prominent holding of the Invesco S&P 500 Equal Weight Health Care ETF (NYSE:RSPH). The company produces and distributes life science research and clinical diagnostic products. On July 20, Bio-Rad Laboratories, Inc. (NYSE:BIO) authorized a new stock repurchase plan of $500 million. The company stated that the acquired shares will be utilized for supporting employee stock plans, financing acquisitions, and reducing dilution resulting from stock issuances.

According to Insider Monkey’s first quarter database, 47 hedge funds were bullish on Bio-Rad Laboratories, Inc. (NYSE:BIO), compared to 42 funds in the prior quarter. 

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