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Play Biotech Buyout Frenzy With These 2 Solid Funds
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Of late, the biotech sector has been thriving on a slew of deals. After all, a flurry of mergers in any sector is always encouraging. Such mergers lend control over markets, increase value and reduce costs. Needless to say, these also lead to economy of scale through sharing of resources, reduced risks owing to usage of innovative techniques as well as tax advantage.
Buyouts in the biotech space that have been hogging the limelight are that of Juno Therapeutics, Inc. and Celgene Corporation , and Sanofi (SNY - Free Report) and Bioverativ Inc. . Celgene agreed to buy Juno Therapeutics for $9 billion or $87 a cash. Meanwhile, Sanofi agreed to acquire Bioverativ for $11.6 billion. The French company insisted on paying $105 in cash for each share purchased.
In the meantime, courtesy of the new tax overhaul policy, biotech firms have been able to repatriate hundreds of billions of dollars stranded overseas and pay only 8% to 15.5% tax, instead of the current 35%. This extra cash can be used for merger and acquisition activities. President Trump’s business tax plan should also benefit biotech companies. The rate will be lowered from 35% to 21% and will be implemented this year, instead of being delayed until 2019. The lower tax burden is expected to boost profits for large biotech companies (read more: Fancy Biotech Stocks on Buyout Buzz? 5 Top Picks).
Play the Stellar Growth With These 2 Biotech Funds
As the biotech sector is all fired up, adding sound mutual funds having significant exposure to the said sector seems judicious. We have, thus, highlighted two funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to help investors identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the probable success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Franklin Biotechnology Discovery A (FBDIX - Free Report) , a Zacks Rank #2 fund, invests a large portion of its net assets in securities of biotechnology companies and discovery research firms. The fund predominantly invests in equity securities. FBDIX seeks capital appreciation and is non-diversified.
This Sector - Health fund, as of the last filing, allocates funds in three major groups — Large Growth, Small Growth and High Yield Bond. Further, as of the last filing, Celgene, Alexion Pharmaceuticals and Incyte Pharmaceuticals were the top holdings of FBDIX.
The Franklin Biotechnology Discovery A fund, managed by Franklin/Temp, carries an expense ratio of 1.02%, less than the category average of 1.31%. Moreover, FBDIX requires a minimal initial investment of $1,000.
FBDIX has a history of positive total returns for over 10 years. Specifically, the fund’s returns in the 1, 3, 5-year benchmarks are 18.8%, 1.3% and 18.6%, respectively.
Fidelity Select Biotechnology (FBIOX - Free Report) , a Zacks Rank #1 fund, invests the majority of its assets in securities of companies principally engaged in the research, development, manufacture, and distribution of various biotechnological products, services, and processes and companies that benefit significantly from scientific and technological advances in biotechnology.
This Sector - Health fund, as of the last filing, allocates funds in three major groups — Large Growth, Small Growth and High Yield Bond. Further, as of the last filing, Amgen, Celgene and Regeneron Pharmaceuticals were the top holdings of FBIOX.
The Fidelity Select Biotechnology fund, managed by Fidelity, carries an expense ratio of 0.74%, less than the category average of 1.31%. Moreover, FBIOX requires a minimal initial investment of $2,500.
FBIOX has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 1, 3, 5-year benchmarks are 27.9%, 3.5% and 19.9%, respectively.
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Play Biotech Buyout Frenzy With These 2 Solid Funds
Of late, the biotech sector has been thriving on a slew of deals. After all, a flurry of mergers in any sector is always encouraging. Such mergers lend control over markets, increase value and reduce costs. Needless to say, these also lead to economy of scale through sharing of resources, reduced risks owing to usage of innovative techniques as well as tax advantage.
Buyouts in the biotech space that have been hogging the limelight are that of Juno Therapeutics, Inc. and Celgene Corporation , and Sanofi (SNY - Free Report) and Bioverativ Inc. . Celgene agreed to buy Juno Therapeutics for $9 billion or $87 a cash. Meanwhile, Sanofi agreed to acquire Bioverativ for $11.6 billion. The French company insisted on paying $105 in cash for each share purchased.
In the meantime, courtesy of the new tax overhaul policy, biotech firms have been able to repatriate hundreds of billions of dollars stranded overseas and pay only 8% to 15.5% tax, instead of the current 35%. This extra cash can be used for merger and acquisition activities. President Trump’s business tax plan should also benefit biotech companies. The rate will be lowered from 35% to 21% and will be implemented this year, instead of being delayed until 2019. The lower tax burden is expected to boost profits for large biotech companies (read more: Fancy Biotech Stocks on Buyout Buzz? 5 Top Picks).
Play the Stellar Growth With These 2 Biotech Funds
As the biotech sector is all fired up, adding sound mutual funds having significant exposure to the said sector seems judicious. We have, thus, highlighted two funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to help investors identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the probable success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Franklin Biotechnology Discovery A (FBDIX - Free Report) , a Zacks Rank #2 fund, invests a large portion of its net assets in securities of biotechnology companies and discovery research firms. The fund predominantly invests in equity securities. FBDIX seeks capital appreciation and is non-diversified.
This Sector - Health fund, as of the last filing, allocates funds in three major groups — Large Growth, Small Growth and High Yield Bond. Further, as of the last filing, Celgene, Alexion Pharmaceuticals and Incyte Pharmaceuticals were the top holdings of FBDIX.
The Franklin Biotechnology Discovery A fund, managed by Franklin/Temp, carries an expense ratio of 1.02%, less than the category average of 1.31%. Moreover, FBDIX requires a minimal initial investment of $1,000.
FBDIX has a history of positive total returns for over 10 years. Specifically, the fund’s returns in the 1, 3, 5-year benchmarks are 18.8%, 1.3% and 18.6%, respectively.
Fidelity Select Biotechnology (FBIOX - Free Report) , a Zacks Rank #1 fund, invests the majority of its assets in securities of companies principally engaged in the research, development, manufacture, and distribution of various biotechnological products, services, and processes and companies that benefit significantly from scientific and technological advances in biotechnology.
This Sector - Health fund, as of the last filing, allocates funds in three major groups — Large Growth, Small Growth and High Yield Bond. Further, as of the last filing, Amgen, Celgene and Regeneron Pharmaceuticals were the top holdings of FBIOX.
The Fidelity Select Biotechnology fund, managed by Fidelity, carries an expense ratio of 0.74%, less than the category average of 1.31%. Moreover, FBIOX requires a minimal initial investment of $2,500.
FBIOX has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 1, 3, 5-year benchmarks are 27.9%, 3.5% and 19.9%, respectively.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>