Biotech ETFs Could Get A Shot In The Arm From Acquisition

Biotechnology is rising up to analyst's predictions that a near future run could send related stocks and exchange traded funds (ETFs) up. The latest April announcement that Takeda Pharmaceutical would buy Massachusetts-based Millennium Pharmaceuticals (MLMN) for $8.8 billion sent the MLMN shares higher than they've been in a while, reports Don Dion for Seeking Alpha.

Millennium sells the anti-cancer injection drug Velcade, and is lifting investor's expectations for a biotech sector run. PowerShares Dynamic Biotech & Genome (PBE) could especially benefit, as 80% of this ETF consists of small-mid-cap stocks that will benefit from the acquisition. PBE holds 8.4% in MLMN. It's down 5.2% year-to-date.

Other biotech ETFs that could experience a shot in the arm:

• SPDR Biotech (XBI), down 3.9% year-to-date
• iShares NASDAQ Biotechnology (IBB), down 4.7% year-to-date
• First Trust AMEX Biotechnology (FBT), down 4.9% year-to-date
• Biotech HOLDRs (BBH), holds 1% in MLMN, up 1.8% year-to-date

A View of ETFs In An Obama White House

If Barack Obama were to win the election for presidency this November, what would happen to the investment world, particularly exchange traded fund (ETF) investors?

Awhile back, we talked about funds that could benefit in a McCain win, as well as an overall Democratic win.

Jonathon Bernstein for ETFZone believes that the most immediate and powerful impact of an Obama win would be the within the area of foreign policy. He could help to ease tensions with the Middle East and Venezuela, which would in turn calm oil prices and shift the overall momentum of the markets. Currently, oil is at all-time highs, so just the thought of Obama in the White House would send oil lower in funds such as Unites States Oil (USO).

The dollar might end up in a stronger state, as a major reason the dollar fell against the euro is oil imports. If the United States were to import less oil, or or pay less for the oil it does import, we might see an improved trade deficit, thus upping the demand for U.S. dollars. CurrencyShares Euro Trust (FXE) would reflect the dollar-euro ratio.

Obama says he would keep tax cuts for the middle class, and doesn't support Bush's tax cuts for the wealthy. Both those and his dividend tax cut expire in 2010. Dividend-focused ETFs such as iShares Dow Jones Select Dividend Index (DVY) or the State Street SPDR Dividend (SDY) could be vulnerable if the tax cuts aren't renewed.

Obama also supports working to put an end to global warming and a push to reduce U.S. carbon emissions by 80% by 2050. He also supports ending the ban on stem cell research.  Both iShares Nasdaq Biotechnology (IBB) and the WildersharesClean Energy (PBW) could experience positive movement if these issues are addressed.

Biotech Sector And ETFs Suffer Failed Study

The biotechnology sector suffered after a Genetech Inc. (DNA) study regarding treatment of Lupus failed, letting down related exchange traded funds (ETFs).

The study of Rituxan was in the later stages, reports Wanfeng Zhou for Thomson Financial.

Genentech lost 5.8% yesterday, while Biogen Idec Inc. (BIIB) lost 4.6%.

Both companies are major components of biotechnology-related ETFs:

• Biotech HOLDRs (BBH): The fund dropped 3.1% to its lowest level since Feb. 22. Genentech is 39.7% of the fund, while Biogen is 9.4%. Year-to-date, the fund is up 0.7%.
• iShares Nasdaq Biotechnology (IBB): Lost 1.1% in trading yesterday. Biogen is 4.3% of the fund. Year to-date, the fund is down 4.1%.

Be Part Of The Solution With A Biotech ETF

The best approach to being involved with the advent of a breakthrough medicine, or a cure for cancer, as an investor, would be to consider a biotech-focused exchange traded fund (ETF).

The most impressive method to access biotech thus far is through an ETF such as iShares Nanotech Biotech Index(IBB). This ETF gives an inexpensive route to biotech with diversification.

Marc Lichenfield for Seeking Alpha has two main points he wants to share concerning biotech in general:

• Biotech tends to drop in the summer, so there could be a good point-of-entry during the months ahead
• Biotech has an above-average risk, so do not devote too much of your portfolio to it. The sector can also reward generously, making the risk worth it.

While the sector has been quiet lately, if either Hillary Clinton or Barack Obama wins the presidential election, the biotechnology sector could stand to benefit, as they're both supporters of ending the ban on stem cell research.

Other Biotech ETFs worth your consideration:

• Biotech HOLDRs (BBH)
• SPDR S&P Biotech (XBI)
• PowerShares Dynamic Biotech S&P Genome (PBE)

Mixed Earnings Reports Give Mixed ETF Results

Merrill Lynch (MER ) posted a first-quarter loss this morning, but so far the broker-dealers exchange traded fund (ETF) seems to be keeping quiet.

The world's largest brokerage said it would cut 3,000 jobs after more than $6.5 billion in fresh write-downs. It's the third consecutive quarterly loss, reports Joe Bel Bruno for the Associated Press. The firm's CEO went on to warn that the next few quarters could be similarly rough.

Yesterday, the Financial Select Sector SPDRs (XLF) rose for the third consecutive trading day. It's up slightly today, as well - will the winning streak continue? Merrill Lynch is 2% of the fund. Year-to-date it's down 11.3%.

The iShares Dow Jones US Broker-Dealers (IAI) is down just 0.05% midday, and year-to-date it's off by 23.8%. Merrill Lynch is 6.5% of the fund.

Pfizer (PFE) reported that is first-quarter profit fell by 18%, because of generic drug competition, says the Associated Press. The numbers were short of estimates. The company also was hurt by the loss of patent protections for drugs such as Norvasc and Zyrtec. The world's best-selling drug, Lipitor, is going to lose its patent protection in 2010. It's a key source of revenue for the company.

Pfizer is 17.6% of the Pharmaceutical HOLDRs (PPH), which are down just over 1% midday. Year-to-date, it's down 10.8%.

IBM (IBM) delivered some good news: they boasted a 26% rise in profits, surpassing expectations, according to Tim Paradis for the Associated Press.

IBM is 31.89% of the Internet Architecture HOLDRs (IAH), which is up less than 1% midday. Year-to-date, it's down 8.2%.

A Rise In Prescription Costs May Take ETFs Up, Too

The problem of expensive health care may soon cut into people who are fully insured, as health insurance companies adopt a new pricing system, sending focused stocks and exchange traded funds (ETFs) into more turbulence. 

The new pricing system focuses prescriptions for expensive drugs used for either saving lives or slowing the progress of serious diseases. Patients may now have to shell out hundreds or thousands of dollars despite the fact that they have insurance.

Gina Kolata for The New York Times says that with the new pricing system, insurers have abandoned the traditional arrangement where patients pay a fixed amount such as $10 or $20, regardless of the drug's actual cost. Patients are responsible for a percentage of the cost of certain high-priced drugs, around 20-33%, in some cases equal to thousands of dollars a month.

The plan, known as "Tier 4," also affects drugs in which there is no generic equivalent, so patients have no alternatives. Insurers argue that this keeps the premiums lower for everyone. Unfortunately, this is an erosion of the very basis of insurance.

Pharmceutical HOLDRs (PPH) may feel a recovery from this new system. Health Care Select Sector SPDR (XLV) could also feel the nausea lift. Year-to-date, PPH is up 3.4%, while XLV is down 10%.

XShares also has its line of HealthShares, which invest in companies involved in various aspects of the healthcare industry. HealthShares Autoimmune-Inflammation (HHA) invests in companies involved in research, clinical development and/or the commercialization of therapeutic agents for the treatment of such diseases as multiple sclerosis and rheumatoid arthritis. Year-to-date, the fund is down 12.6%.

Switzerland and ETF Could Be On the Mend, But More Woes Predicted

Switzerland recently got socked by the global credit crunch, but the country and its exchange traded fund (ETF) seem to be in recovery mode.

The Swiss bank UBS (UBS) had write-downs in the billions last week. Around the same time, mutual funds investing in the country began experiencing inflows. Year-to-date, those funds have reported $2.4 billion in inflows, the bulk of which took place last week, reports Trang Ho for Investor's Business Daily.

It's a turnaround from last year, when those funds experienced $280 million in outflows.

iShares MSCI Switzerland (EWL) has gained 1% during the past year. Year-to-date, it's down 0.6%, but in the last month, it's moved up 2.9%.

One economist predicts more reports of losses and more financial turmoil through the end of the second quarter.

The financial sector accounts for 15% of the Swiss gross domestic product (GDP), and it could make or break the overall economy. The financial sector in the ETF is the third heaviest weighting at 22.6%. The top two are healthcare (30.4%) and consumer goods (25.5%).

UBS is the third-largest holding in the fund, as well, with 5.6% of the assets. The other two holdings have a bigger share of the assets: Nestle has 18.3% and Roche Holding has 14.1%.

Health Care Revenues, ETFs At The Mercy Of Presidential Candidates

Health care exchange traded funds (ETFs) are non-discretionary, have a projected growth rate at 6.6%-6.7% from 2008 through 2017. It could also get a boost from specific reforms, if those reforms come to pass. Much of that depends on which president wins the election.

Senator John McCain:

• Wants a focus on health care for veterans and ensuring that funding is distributed to them fairly
• Giving military retirees tax breaks to help pay their premiums
• Opposes user fees on military retirees for using military medical facilities

Senator Hillary Clinton:

• Wants universal health-care coverage by the end of her second term
• Wants collaboration to achieve this goal

Senator Barack Obama:

• Wants universal coverage by 2012
• Wants to modernize the health care system and keep costs down
• Wants to promote preventative care

Meanwhile, the growing population of baby boomers will drive the growth of the need for health care, reports Will McClatchy for ETFZone. Spending is projected to climb from 16.3% of the GDP to 19.5% of the GDP by 2017. 

A Republican candidate may quietly tighten down on Medicare benefits to cut costs and increase profits, while a Democrat would push volume discounts. These and other health-care related ETFs could be affected no matter what happens next January:

• Health Care Select Sector SPDR (XLV)
• Pharmceutical HOLDRs (PPH)
• iShares NASDAQ Biotechnology (IBB)
• iShares Dow Jones US Health Care (IYH)
• Vanguard Health Care (VHT)

ETF Options Can Be A Predictive Tool

Put/call options ratios are high for certain exchange traded funds (ETFs) and stocks right now.

Mark Fightmaster for Schaeffer's Research reports that the Select Sector SPDR Health Care Fund(XLV)  has a put/call volume ratio of 320.66 or 320.6 puts for every call while the Select Sector SPDR Metals and Mining (XME) has experienced 155.7 puts traded for every call. While the numbers are extreme, the actual underlying stocks see a light trading volume on a day-to-day basis.

Options can be used as a means of predicting the market's direction, says John Summa for Investopedia. By tracking the ratio of puts to calls, you can get a sense of how traders are feeling. If the volume of puts is high, a market bottom could be looming. Too many calls, and the top could be near.

However, do with this what you will: options traders are wrong 90% of the time. Be sure that if you're going along with them, you're not just getting swept up in a frenzy. As with any kind of investing, keeping your emotions out of it will serve you well.

Health Care ETFs Looking A Little Wan

  How healthy are exchange traded funds (ETFs) focused on the medical world for your portfolio?

Many of the ETFs from this field have experienced the ups and downs of the broader market of late so far this year.

• iShares Dow Jones US Healthcare Provider Fund (IHF), down 24.8% year-to-date
• iShares Dow Jones US Pharmaceuticals Fund (IHE), down 11.3% year-to-date
• SPDR S&P Biotech (XBI), down 14.8% year-to-date

The iShares S&P Global Healthcare Index Fund (IXJ) does provide broader exposure to the health care of other countries such a England, Switzerland and France, but it's still bedridden at -10.7% year-to-date.

What's the prognosis, doc? Well, while it isn't terminal, analysts feel that it will be some time before we see a turnaround within the healthcare sector. Momentum may not be in your favor, but they do represent long-term bargain buys.

Billy Fisher for TheStreet reports that the biotechnology sector may be harder to foretell. While the sector gives ample room for growth because of the ability of companies to get new approval for existing drugs, investors must be patient. This sector moves to its own beat instead of that of the rest of the market, which gives it growth advantage over healthcare.

Spring Clean Your Portfolio and Broaden Your Exposure

If you feel spring in the air, it may be time to do some seasonal cleaning for your overall portfolio, including exchange traded funds (ETFs).

Does it appear your portfolio has taken a beating so far in 2008? Ron DeLegge for ETFGuide says it is possible you have overdosed on low-octane, under performing stocks.

In the past year, there have been some stocks on a real losing streak. If you're still sitting on those stocks, DeLegge suggests giving ETFs a look instead to minimize and spread out the damage.

While individual companies come and go all the time, most sectors remain alive and well. Instead of hanging on to those underperformers, get rid of them and replace them with a corresponding sector ETF if you still want to maintain that exposure.

It's a good reminder, too, to keep your emotions out of the game when it comes to investing. If your holdings aren't doing what they should, it's time to let them go and find something that works for you.  Perhaps even establish an exit strategy you can stick to in order to keep your portfolio clean year-round.

It Could Be Time to Take a Global View with Healthcare ETFs

While the United States is still trying to sort out its own health care system, perhaps it's time to take a more global perspective with health exchange traded funds (ETFs).

Here, we're trying to figure out who will be insured and to what extent, and the FDA approval process can hinder the rate of new drug development by biotechnology companies.

With that, Gary Gordon for Seeking Alpha singles out the iShares S&P Global Healthcare Index Fund (IXJ) for several reasons:

• It's one-third less volatile than the S&P 500
• There's exposure to England, Switzerland and France (France has the world's third-largest health care budget; England provides free health care to all residents of the United Kingdom; health care is compulsory in Switzerland)
• Its five-year returns are within a few percentage points of the broader S&P 500, and with less risk

This fund sits far below its trend line (200-day moving average), so wait until it migrates back above before taking a look.

If It's Clinton Or Obama, These ETFs Might Benefit

Now it's time for the flip-side: What exchange traded funds (ETFs) stand to gain from a Democrat (that will be either Barack Obama or Hillary Clinton at this point) occupying the White House?

If Obama wins, says Kevin Baker for The Street, his website calls for $150 billion over ten years to be invested in clean energy technologies. He wants advances in biofuels, plug-in hybrids and an increase in the research of solar and wind power.

Clinton also has marked clean energy as a priority. She wants to reduce greenhouse gas emissions by 80% and cut foreign oil imports, and like Obama, she wants to increase the investment in energy research and development.

With priorities like those, a fund such as the PowerShares WilderHill Clean Energy Portfolio (PBW) could almost certainly benefit. One-third of the ETF is invested in alternative-energy stocks. Market Vectors Global Alternative Energy (GEX) might benefit in a Democratic administration, as well.

Another centerpiece of both the Clinton and Obama campaigns is health care reform. Obama wants to force price cuts in the industry, but without mandating that everyone be covered. Clinton, on the other hand, wants every man, woman and child insured.

The iShares Dow Jones US Insurance Index Fund (IAK) might do well in a Clinton White House, but fare poorly in an Obama one.

If Clinton is the nominee, the Consumer Discretionary Select Sector SPDR (XLY) could be worth a look. That's because her nomination could inspire Republicans to dig deep and donate big toward political commercials. Almost a third of the fund is invested in media companies.

Another fund worth a look if Obama wins the White House is the PowerShares Dynamic Building & Construction (PKB). His plan calls for more spending on roads, bridges and schools. Since this fund is 30% allocated in engineering and construction, it could reap the rewards.

Defense, Biotechnology ETFs Stand to Gain if McCain Wins

The events of Super Tuesday didn't solidify much in the way of the presidential race on the Democratic side, but one person has taken a few guesses as to which exchange traded funds (ETFs) will win if Sen. John McCain takes the presidency.

Based on McCain's record and statements over the last few months, Kevin Baker for The Street predicts that certain sectors, in particular defense and biotechnology, could perform especially well under his leadership.

McCain has said that he's willing to keep troops in Iraq for 100 years if that's what it meant to achieve victory. He wants the United States to "bolster its regional military posture." PowerShares' Aerospace & Defense (PPA) could benefit if McCain stepped up military spending. Among its top holdings are Lockheed Martin (LMT, 6.3%) and Boeing (BA, 6.6%).

McCain also supports embryonic stem-cell research, which could lead to federal funding for it to be restored. If that happens, the SPDR S&P Biotechnology (XBI) could benefit from renewed focus on the "care and cure of chronic disease." Among the fund's top holdings are Regeneron Pharmaceuticals (REGN, 3.6%) and Genentech, Inc. (DNA, 3.5%).

In the interest of balance, Baker will talk later about which ETFs stand to gain in a Hillary Clinton and Barack Obama presidency.

Biotechnology ETFs Raise Hopes On Stock Jump

Biotechnology exchange traded funds (ETFs) and stocks are thriving as fourth quarter earnings from Biogen Idec Inc. (BIIB) gave investors an 84% jump in profit.

According to the Associated Press, Biogen's profits rose on news of sales of its multiple sclerosis drug Avonex and Rituxan, which treats non-Hodgkins lymphoma and rheumatoid arthrities. Rituxan is co-promoted by Genentech (DNA).

Biotech ETFs that could get a lift on the good news:

• iShares Nasdaq Biotechnology (IBB):  Biogen holds 4%; down 4.1% year-to-date
• Biotech HOLDRs (BBH): Biogen, 9.3%;Genentech, 36.6%; up 1% year-to-date
• SPDR S&P Biotech (XBI): Biogen, 3.5%; Genentech, 3.5%; down 6% year-to-date
• First Trust Amex BiotechnologyIndex ETF (FBT): Biogen, 3.8%; Genentech, 4.7%; down 6.6% year-to-date
• PowerShares Dynamic Biotech & Genome (PBE): Biogen 3.9%; Genentech 4.4%; down 7.9% year-to-date

Two New India ETFs Should Hit This Month

The challenge for PowerShares will be getting around India's rules about foreign stock ownership with its new India-focused exchange traded fund (ETF).

Instead of traditional ETFs, which use derivatives and/or notes that provide indirect exposure, the PowerShares India Portfolio (PIN) will provide direct exposure by owning local equities, PowerShares says. It will get around India's restrictions through a proprietary formula, according to InvestmentWires.

The index is designed to track the performance of the equity markets as a whole with representation in various sectors: information technology, health sciences, financial services, heavy industry and consumer products. It's expected to begin trading in mid- to late February.

There isn't going to be just one India ETF, though: WisdomTree is launching one as well. The WisdomTree India Earnings (EPI) fund is expected to launch early this month. The fund will consist of 150 locally listed companies, reports Index Universe for Seeking Alpha, and only includes companies that were profitable in the previous reported 12 months.

Claymore 'Acts Responsibly' and Closes 11 ETFs

After three years of billions of dollars flowing into exchange traded funds (ETFs) and hundreds being launched, one ETF provider is showing their accountability and trimming the hedges.

Following a recommendation and approval from their board of directors, Claymore today filed with the SEC to close 11 of their 37 ETFs. I spoke with Christian Magoon, the head of Claymore's ETF Group, who explained that Claymore felt they have a duty to all shareholders and if some ETFs are not widely accepted in the marketplace, it's Claymore's responsibility to act.

The closing funds represent less than 2% of the firm's U.S. ETF assets. View the press release here. The last trading day for the following funds will be February 19:

• Claymore/BIR Leaders 50 (BST)
  
• Claymore/BIR Leaders Mid-Cap Value (BMV)
  
• Claymore/BIR Leaders Small-Cap Core (BES)
  
• Claymore/Robeco Boston Partners Large-Cap Value (CLV)
  
• Claymore/LGA Green (GRN)
  
• Claymore/KLD Sudan Free Large-Cap Core (KSF)
  
• Claymore/Clear Mid-Cap Growth Index (MCG)
  
• Claymore/Zacks Growth & Income Index (CZG)
  
• Claymore/IndexIQ Small-Cap Value (SCV)
  
• Claymore/Robeco Developed World Equity (EEW)
  
• Claymore/Clear Global Vaccine Index (JNR)

Some ETF naysayers may have been waiting for something like this and may jump all over the news as a sign that the ETF industry has been fat, dumb and happy for too long. In reality, this is probably the kind of move that the conventional mutual fund industry should have made years ago.

Can Pharmaceuticals ETF Dodge the Bug?

The health care sector's decent performance - relative to other sectors - this month helped give the PowerShares Dynamic Pharmaceuticals (PJP) exchange traded fund (ETF) a shot in the arm.

The sector, overall, has been slightly down this month, but it's outperforming the other 11 sectors tracked by Morningstar, reports Don Dion for Seeking Alpha. PJP has been boosted by a small rally in pharmaceutical stocks.

The fund has a lot of challenges facing it, though. Can it surmount them? Bad news from some of the fund's holdings and dull performance results from others could hold it back. So far this month, it has lost 3.5%. What will the future hold?

ETF Investors Want Shelter

Some may wonder if the Fed is in denial: while Bernanke calls for a "slow growth path," Wall Street is calling "recession" and exchange traded fund (ETF) investments and benchmarks are on a steady drop.

As Gary Gordon for ETF Expert points out, the S&P 500 SPDR Trust (SPY) has dropped 9.5% in 12 trading days and is roughly down 15% since the October 9 market top. Ouch!

Other benchmarks and ETFs on the same trend are PowerShares QQQ (QQQQ), iShares Russell 2000 (IWM), Financial Select Sector SPDR (XLF), all down on 20%+ losses from admirable highs. Is it time to grin and bear it?

For those investors who are tired of being dragged by those "wild horses" and are saying "gimme shelter," there are places you don't have to feel like a rolling stone. Gordon looks at these funds and possibilities:

• Global Consumer Staples (KXI)
• Medical Devices (IHI)
• Lehman International Treasuries (BWX)
• Emerging Market Debt (PCY)

Use Caution With Biotechnology ETFs

Sometimes, not all sector exchange traded funds (ETFs) are alike. It pays to do your homework, because although there are often several funds covering an area, performance can vary greatly.

Alan Brochstein of Seeking Alpha says, for example, that when it comes to biotechnology funds, it might appear that you can't go wrong no matter what you pick, caution should still be exercised when it comes to ETFs. Not doing your research could cost you.

The Biotech HOLDR (BBH) is heavily concentrated in three companies and has 15 stocks. The SPDR S&P Biotech (XBI) is more diversified, with 31 holdings, and its top holdings represent less than 5% of the fund's value. Finally, there is the iShares Nasdaq Biotech Index Fund (IBB), which holds 170 stocks.

Aside from the wide-ranging number of holdings in these funds, the 2007 returns for each fund show big differences, too: IBB returned close to the market averages, BBH lost almost 12% and XBI gained 29%.

Managed Care ETF Looks Strong

Health care stocks and exchange traded funds (ETFs) had a ho-hum 2007, but there is one sub-sector that has high expectations for 2008: managed care.

Analysts' expectations are high, since the sub-sector posted a 28% average return for 2007,  placing it 24th out of 100 categories tracked by Morningstar. The average health care stock posted a 12.2% gain, ninth among 12 major sectors.

Don Dion for Seeking Alpha says that's all been great news for the iShares Dow Jones Healthcare Providers (IHF), which wrapped up 2007 up 18.3%. Its top eight holdings are managed-care stocks: six insurers, two pharmacy benefit managers, firms employers and managed-care companies. These stocks account for 65% of IHF's holdings.

This ETF is viewed as a play on aging population, a positive regulatory environment and ever-rising federal spending on health care. In addition, managed care companies, many of which rely on Medicare spending, have repeatedly posted strong profit growth. Could this be a prescription for success?

Instead of Rice Cakes, How About a Health & Fitness ETF?

It seems like everyone else has found a way to capitalize on Americans' never-ceasing desire to lose weight, so how come exchange traded fund (ETF) providers haven't?

This is the time of year, in fact, that many of us are remembering what we said the previous year - that we're going to lose that last ten pounds once and for all - and guiltily recommitting ourselves with a mental promise that this time, it's for real.

We buy brand-new workout clothes and shoes, we register at a weight loss center, join a gym and go on a shopping spree at the store for new, good-for-you snacks. Even when the economy is in the doldrums, people don't ever seem to lose their interest in losing a few pounds or more.

Some companies are already in marketing-mode full force, report Lia Miller and Douglas Quenqua at the New York Times. Weight Watchers and Special K from Kellogg are sponsoring electronic billboards in New York's Times Square -- the epicenter of New Year's Eve celebrations.

All this begs the question: why no health and fitness ETF? This means you could benefit from the fitness craze without ever leaving the comfort of your couch.

Among its possible holdings could be:

• Nike (NKE)
• Lifetime Fitness (LTM)
• Weight Watchers (WTW)
• NutriSystem (NTRI)
• Kraft (KFT)
• Kellogg (K)

Fighting Cancer Goes Nuclear Along With ETFs

Hospitals are undertaking a new nuclear arms race, possibly plumping up related nuclear and cancer exchange traded funds (ETFs).

Andrew Pollack for The New York Times reports that medical centers are rushing to turn nuclear particle accelerators into the latest cancer fighters. These tools were originally used only in the most state-of-the-art physics research. Using them to fight cancer will be costly and still only experimental.

The push to try these reflect the best and the worst of the health care system: while it's an exciting advance, some say that an "arms race" mentality has taken hold. Evidence of improved health is yet to be known, and soaring medical costs continue to burden the nation's economy. Once hospitals make the investment, they could be pressured to recommend the therapy when a less expensive alternative would work just as well.

The machine is said to accelerate protons to the speed of light and shoot them into tumors. The proton beams are more accurate than x-rays and prevent fewer side effects from stray radiation.

This advance could shoot returns into focused ETFs such as:

• HealthShares Cancer (HHK)
  HealthShares Diagnostics (HHD)
  HealthShares Neuroscience (HHN)

An ETF for Every Taste

Exchange traded funds (ETFs) are competing for market share with newer and more exotic offerings. Titles including dermatology and wound care, to insiders or Chile are cropping up and as the flavors become more specialized, the slice of the market gets narrower.

The Seattle Times analysis points out that the niche ETFs don't always offer the other benefits of broader ETFs, the lower expenses, ease of trading and diversification melts away.

Experts warn that ETFs which stray from the plain vanilla types are dropping down into a  riskier area of the market. ETFs that don't catch on may eventually liquidate which could result in unexpected capital-gains taxes for shareholders.

But these ETFs can have a place in some portfolios. Perhaps there is an area you want exposure, but the broad based ETFs just don't give you the exposure you want. Investors have their own reasons for making the investment choices they make. And everyone's risk tolerance is different. Just keep yours in mind when making the choice.

Alzheimer's Research May Trigger Neuroscience ETF

Alzheimer's disease has been unresponsive to the biggest medical and scientific efforts, but a new treatment is in the works that may boost returns in neuroscience-related exchange traded funds (ETFs). The developments could also give hope of recovery for patients in the battle against the disease.

Denise Grady for The New York Times reports that scientists are now aware that Alzheimer's may start at an earlier period in life, not in old age. It is thought to be a chronic condition that begins long before the mind fails. Changes may start as soon as mid-life and scientists are trying to pinpoint the disease before it progresses.

A radioactive dye called PIB (Pittsburgh Compound B) makes it possible to use a PET scan to find deposits of amyloid, an Alzheimer's-related protein, in the brains of living human beings. It could lead to an earlier diagnosis, helping doctors distinguish between Alzheimer's and other forms of dementia. PIB could also aid doctors in monitoring the effects of treatment.

Look into HealthShares Neuroscience (HHN) to find if PIB can trigger any returns.

Healthcare ETFs Could React To Unhealthy News

HealthShares family of exchange traded funds (ETFs) may appeal to investors who are monitoring the latest information regarding uninsured cancer patients. Uninsured cancer patients are twice as likely to die within 5 years, compared to those with private coverage. This is the first study of this type and unveils the troubling health care obstacles faced in this nation, reports Mike Stobbe for Associated Press.

It turns out people who don't have health insurance are not likely to get recommended for cancer screening tests, making the time of diagnosis untimely, as the cancer may have already spread. An analysis says around 4% of the uninsured are accounting for the cancer-related deaths.

Related ETFs are:

• HealthShares Cancer (HHK)
• HealthShares Diagnostics (HHD)
• HealthShares Enabling Technologies (HHV)

M&A Helping Biotech ETF

Biotech stocks and related exchange traded funds (ETFs) tend to take a downward slide once excessive risk enters into the market. Biotech ETFs, have held there own over the past few months, as iShares Nasdaq Biotechnology Index Fund (IBB) is up 3.2% for the past 6 months. Meanwhile the S&P 500 is down 2.3% for the same period.

Don Dion for Seeking Alpha reports that the typically volatile IBB got a boost from mergers and acquisitions. In fact, these newly formed companies could even take the place of the big pharmaceutical companies. Big pharma is struggling and many key drugs are losing patent protection in the coming years, so many firms are looking to fill their pipes through acquisitions. Large-cap biotechs have entered the picture and have helped push up deal premiums.

IBB holds 171 stocks, making it more diversified. There are 35 small or micro-cap stocks and it holds 26.7% of mid-caps stocks, giving it a good position if mergers continue. Established biotechs are becoming more like blue-chip pharma companies since they are taking over the marketing, distribution and sales of their products. Generics are not a threat to biotech like they can be for pharmaceutical firms.

Diagnosis For Pharma ETFs

Pharmaceutical stocks and exchange traded funds (ETFs) may need a new prescription based on upcoming competition. The near future prognosis for pharma looks unhealthy, as some of the top-selling drugs in the industry will become history as the patent protections expire. Barbara Martinez and Jacob Goldstein for The Wall Street Journal reports that the generics will stream in at lower prices, and generic competition will wipe out around $67 billion from top companies. This amount is projected for 2007-2012 as more than 3 dozen will lose their protection.

The signs for needed change are everywhere, as the old method of finding chemicals to treat disease are producing fewer drugs, and the industry is at risk if there isn't change. The future sales decline may be the beginning of the end of a century-old way of doing business. It will be up to the companies to find a way to turn it all around.

Pharmaceutical ETFs and their year-to-date performance include:

• Pharmaceutical HOLDRs (PPH) up 8%
• SPDR S&P Pharmaceuticals (XPH) down 0.5%
• iShares Dow Jones US Pharmaceuticals (IHE) up 5.6%

HHD ETF Provides Stronger Immunity To Market Conditions

HealthShares, a division of XShares, launched 19 exchange traded funds (ETFs) focusing on the assets of health care, with $100 million in assets.  HealthShares Diagnostics (HHD) has around 1/3 of the assets and includes companies that focus on the identification of the existence and the extent of the disease, the visual location, selection of therapeutic agents and monitoring the disease progression, reports ETFExpert Gary Gordon.

The performance of HDD during the summer turbulence was impressive, as it posted an actual gain, compared to losses suffered by the S&P 500 and Russell 2000.  And during the recent market struggles, it has drawn down less than either index.  HHD is up 26.5% since its April inception.  While HHD provides no market immunity to any portfolio, it can offer diversification.

Watch the SPDRs ETFs Grow

The Select Sector SPDRs exchange traded funds (ETFs) cover broad, general sectors of the market. Billions of dollars move into and out of those funds each week. A total of nearly $21.8 billion was invested in the Sector SPDRs at the end of the third quarter, which is an increase of 11.2% from the previous quarter. These ETFs and the percent change in their number of shares outstanding for the months of August to September, according to Index Universe, include:

• Materials Select Sector SPDR (XLB) - 16%
• Health Care Select Sector SPDR (XLV) - 5%
• Consumer Staples Select Sector SPDR (XLP) - 15%
• Consumer Discretionary SPDR (XLY) - 42%
• Energy Select Sector SPDR (XLE) - -13%
• Financial Select Sector SPDR (XLF) - -22%
• Industrial Select Sector SPDR (XLI) - 14%
• Technology Select Sector SPDR (XLK) - 7%
• Utilities Select Sector SPDR (XLU) - 8%

As shown, investors significantly increased their exposure to the consumer market through both XLP and XLY while they decreased their exposure to XLF and XLE. The overall increase in long interest on the SPDRs only tells half of the story though. They're also used often as shorting tools. Short interest for all the SPDRs fell from 53% in August to 42% in September. XLF had the highest short interest in September at 118.5%, followed by XLE at 78.7%. XLK had the lowest level of short interest at 5.7%, followed by XLV at 8.4%.

Cancer-fighting ETFs Could Become Healthier as U.S. Cancer Death Rates Fall

Exchange traded funds (ETFs) that invest in health care, and more specifically cancer, could be influenced by the news that death rates from cancer have been dropping by an average of 2.1% a year in the U.S., which is a near doubling of decreases that began in 1993, according to researchers. The progress in fighting cancer hasn't come from cures, it's come more from prevention. However, in the U.S., cancer remains the second leading cause of death after heart disease, with 559,650 deaths expected this year, reports Denise Grady for The New York Times.

Two ETFs that invest in cancer-fighting companies include the HealthShares Emerging Cancer (HHJ) and the HealthShares Cancer (HHK). HHJ invests in small-cap pharmaceutical or biotechnology companies that have been identified as emerging cancer companies. These companies are engaged in the research, clinical development and/or commercialization of therapeutic agents for the treatment of a wide variety of cancers. Its top three holdings include Dendreon (DNDN) at 8.0%, Xoma (XOMA) at 8.0% and GPC Biotech AG (GPCB) at 6.7%. Currently, HHJ is down 2.1% for the last three months, having launched in January. Its expense ratio is 0.75%.

HHK invests in large- to mid-cap health care, life sciences and/or biotechnology companies that have been identified as cancer companies. Similar to HHJ, these companies are engaged in the research clinical development and/or commercialization of therapeutic agents for the treatment of a wide variety of cancers. Its top three holdings include Onyx Pharmaceuticals (ONXX) at 11.9%, Pharmion (PHRM) at 6.5% and United Therapeutics (UTHR) at 5.4%. Currently, HHK is up 14.5% for the last three months, having launched in March. Its expense ratio is also 0.75%.

Expensive ETFs

Some of the most expensive exchange traded funds (ETFs) have an expense ratio of 0.95%. These ETFs generally serve a different, more specific need than most inexpensive, broad-based funds, such as SPDRs (SPY) or PowerShares QQQ (QQQQ), reports Amanda B. Kish for The Motley Fool.

It's highly likely that investors who are leveraging or selling the market short are not long-term, buy-and-hold types. They usually make numerous trades into and out of these ETFs. While this strategy might not be for everyone, investors who do trade often, may incur more fees with commissions and high expense ratios. If you are the buy-and-hold type, and find these holdings fit well in your portfolio, then you may just be paying a higher expense.

The most expensive ETFs include:

• HealthShares European Specialty Health Funds
• ProShares Short Index Funds
• ProShares Ultra Index Funds (leveraged long)
• ProShares Ultrashort Index Funds (leveraged short)

Neuroscience ETF Benefits from Alzheimer's Disease Research

As new developments come out to treat Alzheimer's Disease, some exchange traded funds (ETFs) can benefit. One such ETF is the HealthShares Neuroscience ETF (HHN). HHN invests in health care, life sciences and/or biotechnology companies that are considered part of the neuroscience industry. Companies included in the Neuroscience Index are engaged in the research, clinical development and/or commercialization of therapeutic agents for the treatment of diseases, such as Alzheimer's, Parkinson's, Huntington's, schizophrenia, anxiety and depression. HHN's expense ratio is 0.75%. Currently, HHN is down 13.2% for the last three months, having just launched in March.

One of HHN's holdings, Elan Pharmaceuticals (ELN) is collaborating with Wyeth (WYE) on a clinical trial of a vaccine for Alzheimer's disease, reports Beth Piskora for Business Week. However, the trial was halted because several of the participants developed severe inflammation of the brain. On a positive note though, researchers saw that patients did exhibit a significant slowing of cognitive decline. The two companies are currently working on a new vaccine that hopefully will not include the side effect of brain inflammation.

Nasdaq's Neuro-focused Index for ETFs?

The Nasdaq Stock Market is preparing to launch an index made up of companies that focus on neurological disorders, following the flurry of exchange traded funds (ETFs) that have launched in the health sector. Companies included in the Nasdaq NeuroInsights Neurotech Index have a primary focus on the development of drugs, devices and diagnostics to treat brain disorders such as Alzheimer's, Parkinson's disease or schizophrenia, reports Toni Clarke for Reuters. It is one of the first indexes to focus solely on this disease category, and it is targeted for institutional and individual investors. This 32-member index has a combined market value of $71 billion. It will be interesting to see how long it takes to launch an ETF that tracks this new index.

Global Combines with Health Care ETFs

Big pharma generally is thought to be a safe haven for exchange traded fund (ETF) investors in times of uncertainty because people always will need prescriptions. However, some experts say the stereotype might not hold true anymore because of FDA setbacks and drug withdrawals, reports Trang Ho for Investor's Business Daily. Some experts say that international investing is replacing big pharma as the new "safe haven." While U.S. agencies may play a role in health care, perhaps looking at it from a global perspective might add value, especially if they satisfy any of the aging baby boomers' needs.

To take advantage of global health care companies that profit from the U.S. and abroad, consider iShares S&P Global Health Care Sector (IXJ). IXJ holds 79 stocks and is heavily weighted in the U.S at 65%. It also holds 12% in Switzerland, 11% in the U.K., 5% in Japan and 4% in France. It's up 2.9% year-to-date.

ETFs for Good Health

Health care exchange traded funds (ETFs) seem to be the investment topic of the day. Last year, the oldest of the baby boomers turned 60, the first of the next 80 million! The U.S. health-care industry stands to profit from boomers, and ETF sponsors are well aware. Around a dozen firms have come forward with about 40 health care-related ETFs, reports Zoe Van Schyndel for The Motley Fool. Most health-related ETFs share a common characteristic: Their holdings are weighted by market capitalization. That means the larger, more well-known companies will dominate in a majority of funds.

HealthShares breaks the mold by equally weighting the holdings so that no one company dominates. PowerShares also takes its own path with fundamentally-weighted funds, picking stocks based upon sales, cash flow, book value and dividends.

Health care ETFs can be broad or narrowly focused. Two broad based ETFs with a track record include Vanguard Health Care ETF (VHT), up 7.3% year-to-date and iShares Dow Jones U.S. Healthcare Sector Index Fund (IYH), up 6.9%.

Boomers Could Help Future of Health and Biotechnology ETFs

Investing in biotechnology and health-related exchange traded funds (ETFs) would seem to make sense as the baby boomer generation ages. An increase in older citizens creates more demand for health care services with the best technology and medications available. In fact, the number of available health care-related ETFs has doubled to 41 in 2007, according to Trang Ho for Investor's Business Daily.

However if you decide to add this sector to your portfolio, be careful which biotech and health-related ETFs you choose, as all are not created equal. For example, the iShares Nasdaq Biotechnology (IBB) that follows the Nasdaq Biotechnology Index has had a much more volatile performance than the general market. IBB is a general biotech ETF that invests at least 90% of its assets in biotech-related American Depository Receipts (ADRs). Currently, IBB is up 5.4% year-to-date.

If you look at the iShares Dow Jones U.S. Medical Devices (IHI) it's been soaring up, up and away compared to the market, as Gary Gordon for ETF Expert notices. IHI follows the Dow Jones U.S. Select Medical Equipment index. It invests in medical equipment companies that make prosthetics, pacemakers, X-ray machines among other devices. Currently, IHI is up 15.6% year-to-date.

Help Prevent Disease with HealthShares ETFs

By adding HealthShares exchange traded funds (ETFs) into your portfolio you might help America overcome its budget crisis. As of now, the U.S. spends around $2 trillion in health care with an escalating rate of 9% per year. Carl Delfeld for Forbes reports that by continuing to treat disease symptoms with prescription drugs, demographic trends in America will force expenditures to explode as well as the government budget that covers most of these costs for seniors.

Jeffrey Feldman, founder of HealthShares, has a rationale for his rapidly expanding family of ETFs. The idea is to prevent disease instead of treat it, or make breakthroughs in areas that cure ailments such as diabetes. Around half of the phase III clinical trials for entrepreneurial firms are from mid-, small- and micro-cap companies. ETFs are here to help investors put their money into getting these companies off the ground and into alternative medicine to help America. Some HealthShares ETFs include:

• HealthShares Cardiology ETF (HRD)</