A biotech ETF is the best way for investors to bet on high-risk high-reward biotech stocks, for several reasons.
To start, making individual picks for biotech stocks is difficult, as one big drug development or disappointment can send shares soaring or sinking in the blink of an eye.
Meanwhile, biotech stocks are only a small slice of the broader healthcare pie. Biotech stocks make up only 18% of the holdings in the Health Care SPDR (XLV), for example. Nearly half of the ETF is composed of pharmaceuticals stocks.
Buying a biotech ETF solves both these problems. A biotech ETF gives investors much more direct exposure to biotech stocks … without the risk of putting all their eggs into just one or two baskets.
So, if you’re looking to jump into the sector but aren’t high on trying to guess on the next big medical breakthrough, here’s a look at the three best biotech ETF investments out there: