10 Best Performing Biotech ETFs in 2024

Published on April 22, 2024 at 11:10 am by Sheryar Siddiq in ETF Trading, Hedge Funds, News

In this article, we discuss the 10 best performing biotech ETFs in 2024.

Biotechnology is a challenging field, not ideal for the faint of heart. Companies within this sector often utilize biological components in their product development which require hefty investments. Consequently, biotechnology stocks are notorious for their high-risk levels, making them some of the most volatile assets in the stock market. The prices of these equities can experience dramatic fluctuations, influenced by the outcomes of Food & Drug Administration (FDA) clinical trials and the performance of their treatments in real-world scenarios. In 2020, the biotechnology industry gained significant attention amid the pandemic, particularly with the introduction of COVID-19 vaccines by companies like Pfizer Inc (NYSE:PFE), Moderna, Inc. (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ). However, as society adapted to living with COVID-19 and other economic and political issues came to the forefront, interest in biotech waned.

With that said, the Financial Times reports that in January of this year, drug developers amassed $6 billion in equity capital markets, marking the highest total since February 2021—when biotech stocks peaked. This uptick indicates a robust recovery from a challenging two-year period, during which many companies struggled financially, resulting in layoffs, halted projects, and, in some cases, closures. A key factor driving this resurgence in biotech investments is the overall improvement in stock market performance. After a period of volatility and declines, the stock market has stabilized and begun to exhibit signs of growth. This stability has bolstered investor confidence, prompting a renewed interest in the biotech sector. Notably, the SPDR S&P Biotech ETF (NYSE:XBI) has experienced a significant rebound, climbing 40% since October, underscoring investors’ renewed enthusiasm for biotech stocks.

Amid increasing healthcare demands, there has been a notable emphasis on personalized medicine and innovative therapies, fueling the expansion of the biotech industry. Additionally, government initiatives aimed at modernizing regulations and improving reimbursement policies are further bolstering market growth. According to IQVIA, global spending on medications is projected to reach $2.30 trillion by 2028, with a compound annual growth rate (CAGR) of 5% to 8%. Oncology and obesity are expected to drive this growth, while spending on immunology may slow due to the introduction of biosimilars. Biotech is anticipated to represent 39% of total spending, surpassing $892 billion by 2028, with cell and gene therapies experiencing rapid growth rates. The integration of artificial intelligence (AI) in drug discovery and development has emerged as a transformative force, revolutionizing traditional approaches and enhancing efficiency throughout the pharmaceutical research and development (R&D) process. For example, NVIDIA Corporation (NASDAQ:NVDA) recently unveiled partnerships with Johnson & Johnson (NYSE:JNJ) to integrate generative AI into surgical procedures and with GE HealthCare Technologies Inc. (NASDAQ:GEHC) to bolster medical imaging capabilities.

To tap into the promising growth opportunities within the biotech sector, investors can consider ETFs that provide exposure to leading industry players such as Eli Lilly and Company (NYSE:LLY), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and Amgen Inc. (NASDAQ:AMGN).

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Our Methodology

We compiled our selection of the best performing biotech ETFs by ranking the top 10 based on their 5-year share price performance as of April 20, 2024, arranging them in ascending order for clarity. Additionally, we’ve provided insights into the top holdings of each ETF to enhance understanding for potential investors.

10. SPDR S&P Biotech ETF (NYSE:XBI)

5-Year Share Price Performance as of April 20: -5.06%

The SPDR S&P Biotech ETF (NYSE:XBI) seeks to mirror the performance of the S&P Biotechnology Select Industry Index, offering exposure to the biotech sector within the S&P Total Market Index. With assets under management totaling $6,251.28 million as of April 18, the ETF diversifies across large, mid, and small-cap biotech stocks, featuring a gross expense ratio of 0.35%.

Exact Sciences Corporation (NASDAQ:EXAS) holds a prominent position within the SPDR S&P Biotech ETF (NYSE:XBI). Specializing in cancer screening and diagnostic tests, Exact Sciences Corporation (NASDAQ:EXAS) reported a Q4 GAAP EPS of -$0.27 and revenue of $647 million on February 21, surpassing Wall Street estimates by $0.21 and $7.3 million, respectively.

Insider Monkey’s fourth-quarter database reveals bullish sentiment from 39 hedge funds toward Exact Sciences Corporation (NASDAQ:EXAS), down from 45 funds in the previous quarter.

Artisan Small Cap Fund made the following comment about Exact Sciences Corporation (NASDAQ:EXAS) in its Q3 2023 investor letter:

“Among our top detractors were Lattice Semiconductor, Shockwave and Exact Sciences Corporation (NASDAQ:EXAS). Exact Sciences is a leading provider of diagnostic testing and maker of the noninvasive colorectal cancer screening test Cologuard®. The stock was a top performer through the first half of the year but pulled back in Q3. The company reported strong financial results as 31% growth in screening revenues (mostly Cologuard®) drove an overall 19% revenue increase. However, screening revenues fell slightly short of elevated expectations and were not good enough to support the stock’s year-to-date outperformance. We continue to be bullish on Cologuard’s® long-term growth potential; the addressable market expanded significantly in 2021 when the United States Preventive Services Task Force lowered the recommended age for colorectal cancer screenings to 45 from 50. Our research indicates the lowered screening age expands the company’s addressable market by ~18 million unscreened individuals. We also believe meaningful long[1]term opportunities exist as the company develops additional high-value cancer tests.”

In addition to Eli Lilly and Company (NYSE:LLY), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and Amgen Inc. (NASDAQ:AMGN), Exact Sciences Corporation (NASDAQ:EXAS) is a biotechnology stock that investors should look out for.

9. First Trust NYSE Arca Biotechnology Index Fund (NYSE:FBT)

5-Year Share Price Performance as of April 20: 1.16%

The First Trust NYSE Arca Biotechnology Index Fund (NYSE:FBT) seeks to replicate the performance of the NYSE Arca Biotechnology Index, which encompasses companies within two sub-industries: Biotech Therapeutics, focused on therapeutic treatments, and Biotech Tools & Diagnostics, centered on tools and processes supporting biotechnology practices. Established on June 19, 2006, the ETF holds a portfolio of 30 stocks and offers a gross expense ratio of 0.56%.

Intra-Cellular Therapies, Inc. (NASDAQ:ITCI) is the biggest holding of the First Trust NYSE Arca Biotechnology Index Fund (NYSE:FBT). Intra-Cellular Therapies, Inc. (NASDAQ:ITCI) is a biopharmaceutical company dedicated to discovering, clinically developing, and commercializing small molecule drugs primarily targeting intracellular signaling mechanisms in the central nervous system. On February 22, the company reported a Q4 GAAP EPS of -$0.30, surpassing market consensus by $0.15. Although revenue increased by 50.2% year-over-year to $132 million, it fell short of Street estimates by $3.67 million.

According to Insider Monkey’s fourth quarter database, 42 hedge funds expressed bullish sentiments toward Intra-Cellular Therapies, Inc. (NASDAQ:ITCI), compared to 37 funds in the preceding quarter. Kurt Von Emster’s VenBio Select Advisor holds the largest stake in the company, with 2.25 million shares valued at $161.5 million.

8. Tema Oncology ETF (NASDAQ:CANC)

5-Year Share Price Performance as of April 20: 2.85%

Tema Oncology ETF (NASDAQ:CANC) is an actively managed fund designed for long-term growth by investing in oncology companies. Established on August 14 of the previous year, the ETF boasts a portfolio of 47 stocks and assets under management totaling nearly $17.13 million as of April 18, 2024. Its gross expense ratio stands at 0.99%.

Leading the holdings of the Tema Oncology ETF (NASDAQ:CANC) is Merck & Co., Inc. (NYSE:MRK), a key player in the pharmaceutical industry, focusing on the development of medicines, vaccines, biologic therapies, and animal health products. As of March 11, analysts at Cantor Fitzgerald assigned a $135 price target and an Overweight rating to Merck & Co., Inc. (NYSE:MRK).

During the fourth quarter of 2023, 98 out of 933 hedge funds surveyed by Insider Monkey had invested in Merck & Co., Inc. (NYSE:MRK), with Fisher Asset Management, led by Ken Fisher, emerging as the largest shareholder with a $1.4 billion stake.

7. Invesco Biotechnology & Genome ETF (NYSE:PBE)

5-Year Share Price Performance as of April 20: 12.92%

Established on June 23, 2005, the Invesco Biotechnology & Genome ETF (NYSE:PBE) tracks the Dynamic Biotech & Genome Intellidex Index, which comprises 30 US-based biotechnology and genome companies primarily engaged in research, development, manufacturing, marketing, and distribution of biotechnological products and services. As of April 18, the total expense ratio of the Invesco Biotechnology & Genome ETF (NYSE:PBE) was recorded at 0.58%.

Among the top holdings of the Invesco Biotechnology & Genome ETF (NYSE:PBE) is Neurocrine Biosciences, Inc. (NYSE:NBIX), a pharmaceutical company dedicated to discovering, developing, and marketing treatments for neurological, neuroendocrine, and neuropsychiatric disorders worldwide. On February 7, the company reported a Q4 non-GAAP EPS of $1.54, surpassing market estimates by $0.03, alongside a revenue of $515.2 million, slightly below Street expectations by $3.19 million.

According to Insider Monkey’s fourth quarter database, 55 hedge funds maintained a bullish stance on Neurocrine Biosciences, Inc. (NYSE:NBIX), consistent with the prior quarter.

Like Eli Lilly and Company (NYSE:LLY), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and Amgen Inc. (NASDAQ:AMGN), Neurocrine Biosciences, Inc. (NYSE:NBIX) is one of the best biotechnology plays to consider.

6. Tema Cardiovascular and Metabolic ETF (NASDAQ:HRTS)

5-Year Share Price Performance as of April 20: 14.54%

One of the best performing biotech ETFs out these, the Tema Cardiovascular and Metabolic ETF (NASDAQ:HRTS) is an actively managed fund designed to achieve long-term capital growth by investing in companies leading the fight against obesity and cardiometabolic diseases. Launched on November 20, 2023, the ETF has amassed $58.17 million in assets under management as of April 18, 2024, with a net expense ratio of 0.75% and a portfolio consisting of 44 stocks.

Eli Lilly and Company (NYSE:LLY) is among the prominent holdings of the Tema Cardiovascular and Metabolic ETF (NASDAQ:HRTS). Engaged in the discovery, development, and marketing of human pharmaceuticals, Eli Lilly and Company (NYSE:LLY) garnered attention on April 2 when Citi analyst Andrew Baum raised the price target on its shares to $895 from $675, maintaining a Buy rating.

As of December 2023, Insider Monkey’s database indicates that 102 out of 933 hedge funds had acquired and retained shares of Eli Lilly and Company (NYSE:LLY). Among these, Ken Fisher’s Fisher Asset Management held the largest stake in the company, valued at $2.6 billion.

Aristotle Atlantic Core Equity Strategy stated the following regarding Eli Lilly and Company (NYSE:LLY) in its fourth quarter 2023 investor letter:

“Eli Lilly and Company (NYSE:LLY) is a leading pharmaceutical company that develops diabetes, oncology, immunology and neuroscience medicines. The company generates over half of its revenue in the U.S. from its top-selling drugs Trulicity, Verzenio and Taltz. The company operates in a single business segment, Human pharmaceutical products.

Eli Lilly has a deep pipeline in treatment areas focused on metabolic disorders, oncology, immunology and central nervous system disorders. Currently, there are two phase three assets, Orforglipron, an oral GLP-1 and retatrutide, a triple incretin agonist, which have the potential to expand upon the potential success of Mounjaro. We believe that Mounjaro has the potential to commercialize beyond type 2 diabetes and obesity, potentially in the areas mentioned above of heart disease, sleep apnea, fatty liver disease and chronic kidney disease. We believe the premium valuation is supported by this outsized growth profile.”

5. Putnam BioRevolution ETF (NYSE:SYNB)

5-Year Share Price Performance as of April 20: 15.67%

The Putnam BioRevolution ETF (NYSE:SYNB) is designed to pursue long-term capital growth by investing in a carefully curated portfolio of 30-50 stocks. As of April 18, the fund boasts net assets totaling $5.43 million, coupled with an expense ratio of 0.70%.

Among the top holdings of the Putnam BioRevolution ETF (NYSE:SYNB) is Thermo Fisher Scientific Inc. (NYSE:TMO). Thermo Fisher Scientific Inc. (NYSE:TMO) is a global leader in providing life sciences solutions, analytical instruments, specialty diagnostics, laboratory products, and biopharma services. On February 1, RBC Capital analysts reaffirmed an Outperform rating and set a price target of $642 for Thermo Fisher Scientific Inc. (NYSE:TMO).

In the fourth quarter, a total of 111 hedge funds maintained long positions in Thermo Fisher Scientific Inc. (NYSE:TMO), collectively holding a stake valued at $10.3 billion.

4. iShares Biotechnology ETF (NASDAQ:IBB)

5-Year Share Price Performance as of April 20: 16.13%

The iShares Biotechnology ETF (NASDAQ:IBB) seeks to replicate the investment performance of the NYSE Biotechnology Index, composed of American equities within the biotechnology sector. As of April 18, the fund boasts $6.91 billion in net assets, with an expense ratio of 0.45%.

Among its top holdings is Amgen, Inc. (NASDAQ:AMGN), headquartered in Thousand Oaks, California. Amgen is a leading biotechnology company specializing in discovering, developing, manufacturing, and delivering innovative human therapeutics, focusing on areas with significant unmet medical needs. On February 6, Amgen, Inc. (NASDAQ:AMGN) released its financial results for Q4 2023, reporting a 20% year-over-year increase in revenues to $8.2 billion and a net income of $767 million. The normalized EPS for the quarter stood at $4.71, exceeding the consensus by $0.12.

In the fourth quarter of 2023, 69 out of the 933 hedge funds examined by Insider Monkey held shares of Amgen Inc. (NASDAQ:AMGN). The largest stake was held by Josh Overdeck and David Siegel’s Two Sigma Advisors, valued at $333 million.

3. Virtus LifeSci Biotech Products ETF (NYSE:BBP)

5-Year Share Price Performance as of April 20: 19.85%

The Virtus LifeSci Biotech Products ETF (NYSE:BBP) seeks to replicate the performance of the LifeSci Biotechnology Products Index, which tracks biotechnology firms with at least one FDA-approved drug therapy, excluding fees and expenses. As of April 18, the fund possesses $17.84 million in net assets, with an expense ratio of 0.79%.

Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS) holds the largest position in the Virtus LifeSci Biotech Products ETF (NYSE:BBP). Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS) is an American biopharmaceutical company specializing in the development and commercialization of innovative treatments for eye care.

Insider Monkey’s fourth-quarter database reveals that 18 hedge funds maintained long positions in Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS), down from 20 funds in the previous quarter.

2. Franklin Genomic Advancements ETF (BATS:HELX)

5-Year Share Price Performance as of April 20: 20.61%

The Franklin Genomic Advancements ETF (BATS:HELX) is an actively managed ETF focused on capital appreciation by investing in companies involved in genomic-based technologies, aiming to enhance the quality of life. It targets firms benefiting from or facilitating advancements such as DNA sequencing, gene editing, and personalized medicine. As of April 19, the Franklin Genomic Advancements ETF (BATS:HELX) possesses $8.85 million in net assets.

Leading the portfolio of the Franklin Genomic Advancements ETF (BATS:HELX) is Medpace Holdings, Inc. (NASDAQ:MEDP). Medpace Holdings, Inc. (NASDAQ:MEDP) provides clinical research-based drug and medical device development services worldwide. On February 12, the company reported a Q4 GAAP EPS of $2.46 and revenue of $498.4 million, surpassing Wall Street estimates by $0.24 and $0.63 million, respectively.

Insider Monkey’s fourth-quarter database reveals that 38 hedge funds were bullish on Medpace Holdings, Inc. (NASDAQ:MEDP), up from 36 funds in the previous quarter.

1. VanEck Biotech ETF (NASDAQ:BBH)

5-Year Share Price Performance as of April 20: 23.40%

The VanEck Biotech ETF (NASDAQ:BBH) seeks to replicate the performance of the MVIS US Listed Biotech 25 Index, which comprises companies involved in the development, production, marketing, and sales of drugs utilizing genetic analysis and diagnostic equipment. Established on December 20, 2011, the fund boasts net assets totaling $410.74 million as of April 19.

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) holds a prominent position among the top holdings of the VanEck Biotech ETF (NASDAQ:BBH). Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology company primarily focused on developing and commercializing therapies for cystic fibrosis. On February 13, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) announced that the European Commission granted conditional marketing authorization to CASGEVY for the treatment of Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia (TDT).

In the fourth quarter of 2023, 62 out of the 933 hedge funds examined by Insider Monkey held shares of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). The largest stake was held by Cliff Asness’ AQR Capital Management, valued at $262.34 million.

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