The largest and most liquid broad-based biotech sector iShares Nasdaq Biotechnology (NASDAQ: IBB), which reflects the performance of the Nasdaq Biotechnology Index, offers the opportunity to gain exposure to biotechs while mitigating the risk from picking out potential duds in the sector, comments Jim Woods for InvestorPlace.
Often, big moves in biotech stocks come from successful stages of drug development. The biggest risk is that one unsuccessful stage, which sends a company back to square one. The biggest reward is approval, of course. [Play the Booming Biotech Sector With ETFs.]
If you believe the sector will be up or down in the short-term, consider ProShares Ultra Biotechnology (NYSEArca: BIB) or ProShares UltraShort NASDAQ Biotechnology (NYSEArca: BIS) to capitalize on quick moves.
If you want to play it straight, then there are these in addition to IBB:
- The sector has been awash in big mergers. Back in August, Sanofi-Aventis (NASDAQ: SNY) made a $69 a share offer to acquire a troubled Genzyme (NASDAQ: GENZ) with a poor track record, but now, a few bullish Genzyme analysts estimate $80 a share is more suitable, reports Brett Chase for Minyanville. [Deal-Making Drives ETFs Higher.]
- Demand for pharmaceuticals has stayed fairly consistent, even through the recession. Emerging market demand is expected to help pick up any slack.