The best ways of climbing aboard the biotech investment bandwagon
Exchange traded or mutual funds allow those with no or limited knowledge of the biotech industry’s potential exposures to reduce risk
In the world of biotechnology investment, notorious for share price volatility and it “high-risk return” nature, investing in exchange traded funds (ETFs) or mutual funds might be the sensible route for retail investors.
The minefield of sometimes-undecipherable medical and technical terms and acronyms, as well as complicated drug regulatory procedures, mean it is a tricky ask for retail investors to successfully research the sector accurately enough to stock-pick themselves.
But these products allow those with no or limited knowledge of the industry’s potential exposures to reduce risk through diversification.
Brad Loncar, chief executive of Kansas, US-based investment firm and stock index provider Loncar Investments, is hoping to offer ETFs in Hong Kong, based on its own Loncar China BioPharma Index.
“As an investor myself, it is clear that all the elements [of an emerging biotech industry] are coming together in China, and will see a lot of growth … but it is difficult for outsiders to understand and track company performances,” he told South China Morning Post on the sidelines of the China Healthcare Investment Conference in Shanghai late last month.
“For example, most people either don’t invest in immuno-therapy [a type of treatment that boosts the body’s natural defences to fight the cancer] because companies are too technical to understand, or for those who do, they probably buy the couple of stocks that they know, which is still very risky.