With healthcare and, more specifically, biotechnology stocks and ETFs on the mend, investors may want to consider getting tactical and focusing on one of the arena’s most potent growth avenues: genomics.
For individual investors, stock-picking among genomics names can be difficult, but this is a landscape where active management can be rewarding. Investors can gain those benefits and access to a stellar management team via the ARK Genomic Revolution Multi-Sector Fund (NYSEArca: ARKG).
The fund includes companies that merge healthcare with technology and capitalize on the revolution in genomic sequencing. These companies try to better understand how biological information is collected, processed and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals and enhancing our quality of life.
Consider this: ARKG is up nearly 49% year-to-date while the largest passively managed healthcare ETF is higher by “just” 18.71%.
Last week, ARKG jumped 3.36%, including a modest Friday gain that saw the fund hit an all-time high. That action extended the ETF’s December upside to 8.54%.
“Genomic sequencing is changing the way biological information is collected, processed, and applied. ARKG is focused on the disruptive innovations that are increasing precision, restructuring health care, agriculture, pharmaceuticals, and enhancing the quality of life,” according to ARK Investment Management.
The $396 million ARKG can hold between 35 and 55 stocks and last week some of those names were catalysts for the fund’s rally.
“Cellectis (CLLS), a leading allogeneic CAR-T company with intellectual property (IP) in TALENs-based gene-editing, traded up 15.3% on Tuesday,” notes ARK. “Investors are bullish on Cellectis’ ability to cut the costs of autologous-based CAR-T therapies. While potentially lifesaving, autologous-based CAR-T therapies come at a high price. Novartis, for example, prices Kymriah at $475,000 USD. Cellectis potentially could halve these costs with an off-the-shelf solution that is safer than competitive solutions.”
Related: Actively Managed ETFs Provide Forward-Looking Strategies
Cellectis is ARKG’s eighth-largest holding at an allocation of 4.10% and there’s more to the ARKG story.
The DNA sequencing market is experiencing significant growth, with estimates expecting the market to grow from $6.2 billion in 2017 to $25.5 billion by 2025 – representing a compound annual growth rate of 19%.i As a result of significant technological advances in the field, it’s estimated that anyone with $100 can now sequence their DNA, down from the $100 million it was estimated to cost in 2001.
For more information on the biotech segment, visit our biotechnology category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.