Biotechnology companies, especially those categorized as small-cap, are known for their innovative solutions in the healthcare sector. Investing in small-cap biotech companies can offer promising growth opportunities for investors seeking exposure to this rapidly evolving industry. Exchange-traded funds (ETFs) provide a convenient way to diversify investments across multiple small-cap biotech companies while mitigating individual stock risk. In this article, we will explore five small-cap biotech ETFs that investors should keep an eye on in 2024.
1. **Invesco Dynamic Biotechnology & Genome ETF (PBE):** This ETF provides exposure to small-cap biotechnology and genome companies in the U.S. The fund’s dynamic methodology selects companies based on various investment criteria, such as growth potential, stock valuation, and risk factors. PBE’s top holdings include innovative companies involved in genetic research, drug development, and biotechnology breakthroughs.
2. **Loncar Cancer Immunotherapy ETF (CNCR):** As the name suggests, CNCR focuses on cancer immunotherapy companies, many of which fall within the small-cap segment. Immunotherapy is a rapidly growing field within biotechnology, offering novel treatments for various types of cancer. This ETF offers investors exposure to companies at the forefront of developing groundbreaking immunotherapies to combat cancer.
3. **ARK Genomic Revolution Multi-Sector ETF (ARKG):** While not exclusively small-cap, ARKG includes a significant number of innovative small-cap biotech companies in its portfolio. This ETF focuses on genomic sequencing, CRISPR technology, molecular diagnostics, and other revolutionary advancements in biotechnology. ARKG’s active management strategy aims to capture the potential growth of companies disrupting the healthcare industry.
4. **iShares Genomics Immunology and Healthcare ETF (IDNA):** IDNA provides exposure to companies involved in genomics, immunology, and healthcare innovation. Although not specifically tailored to small-cap companies, this ETF includes a mix of mid-cap and small-cap biotech firms in its portfolio. IDNA is suitable for investors seeking diversified exposure to companies driving advancements in genetics, personalized medicine, and healthcare technologies.
5. **First Trust NYSE Arca Biotechnology Index Fund (FBT):** FBT tracks the NYSE Arca Biotechnology Index, which includes small-cap, mid-cap, and large-cap biotech companies. This ETF offers investors broad exposure to the biotechnology sector, with an emphasis on companies involved in drug discovery, clinical trials, and healthcare research. FBT’s diversified approach may appeal to investors looking for exposure across the entire biotech market.
In conclusion, small-cap biotech ETFs can provide investors with an opportunity to participate in the growth potential of innovative companies disrupting the healthcare industry. While investing in small-cap stocks carries inherent risks, ETFs offer a diversified approach to mitigate individual company risk. By keeping an eye on these five small-cap biotech ETFs in 2024, investors can stay informed about emerging trends and investment opportunities in the dynamic biotechnology sector.
