Biotech balance: mutual fund diversification lets investors temper biotech's risk.There is a peculiar split down the middle of the health sciences industry. On one side, there are stalwart Stalwart A description of companies that have large capitalizations and provide investors with slow but steady and dependable growth prospects. Notes: The annual gain that would be viewed as the norm for investing in stalwarts is about 10% to 12%. pharmaceutical companies, such as Merck and Pfizer, which put out blockbuster block·bust·er n. 1. Something, such as a film or book, that sustains widespread popularity and achieves enormous sales. 2. A high-explosive bomb used for demolition purposes. 3. medications and earn billions of dollars a year. On the other side are upstart biotechnology outfits that are discovering new treatments on the frontier On the Frontier: A Melodrama in Two Acts, by W. H. Auden and Christopher Isherwood, was the third and last play in the Auden-Isherwood collaboration, first published in 1938. of medicine. Their stocks can be big winners or equally large disappointments. Morningstar reports that funds that focus only on the biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. sector, such as Fidelity Advisor Biotech (FBTAX) or Alliance Bernstein SIS Biotech (ASBAX), were up between 20% and 50% in the first half of 2003. The flip side Flip side In the context of general equities, opposite side to a proposition or position (buy, if sell is the proposition and vice versa). : Those same funds were down more than 20% in 2001 and 40% in 2002. Some mutual funds can put together a portfolio that combines the pop of the biotech industry with the stability of the pharmaceutical industry, but it can be tricky Adrian Thaws (born January 27, 1968), better known as Tricky, is an English rapper and musician important in the trip hop and British music scene (despite loathing the "trip hop" tag). He is noted for a whispering lyrical style that is half-rapped, half-sung. . The three-year average annual return for the Fidelity Select Biotechnology fund (FBIOX), which has a 76% stake in biotech stocks, was rather rocky--18.26% at the end of June, despite a healthy jump in early 2003. A more staid staid adj. 1. Characterized by sedate dignity and often a strait-laced sense of propriety; sober. See Synonyms at serious. 2. fund, the T. Rowe Price T. Rowe Price (NASDAQ: TROW) is an independent global investment management firm and mutual fund manager based in Baltimore, Maryland. It was founded in 1937 by Thomas Rowe Price, Jr.. T. Health Sciences (PRHSX) portfolio, may put just 38% of its assets in biotech stocks, but it provides investors a smoother ride. The fund's three-year average annual total return was 0.26% as of the end of June. "It's been a great year for biotech, but investors have to remember just how volatile the sector is," says Christopher Davis, a fund analyst with Morningstar. "The numbers are impressive now, but some of the companies in the group lost 50% or 60% of their value a couple of years ago." That said, we approached Morningstar to screen its database for health sciences funds with just under 50% of their assets in biotech stocks. Those funds were then ranked by three-year average annual total return as a way to measure their portfolio managers' work over the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. . Evergreen evergreen, term commonly used as synonymous with conifer and applied also to all those broad-leaved plants that bear green leaves throughout the year. Of the latter, most are plants of the tropics, subtropics, and other areas where the growing season is prolonged (e. Health Care (EHCBX) came out on top with a 26% weighting in biotech. Under the guidance of portfolio manager Liu-Er Chen, the fund logged a 5% total return over the three-year period ending June 30, and tallied a 28% gain in the first six months of 2003. Among Chen's largest holdings were biotech companies Amgen and Genentech, counterbalanced coun·ter·bal·ance n. 1. A force or influence equally counteracting another. 2. A weight that acts to balance another; a counterpoise or counterweight. tr.v. by pharmaceutical mainstays Pfizer, Johnson & Johnson, and Merck. Morningstar's Davis says T. Rowe Price Health Sciences has also maintained a solid record of mixing investments in big drug manufacturers with doses of biotech. Portfolio manager Kris Jenner enjoyed a 23.6% gain year-to-date as of the end of June, thanks in part to biotech companies such as Amgen.
Top Domestic Biotech Funds
1-Year 3-Year Minimum
Fund Name (Ticker) Return * Return * Phone Number Investment
Evergreen Health Care
B (EHCBX) 19.77% 6.75% 800-343-2898 $1,000
T. Rowe Price Health
Science (PRHSX) 14.65 -0.21 800-638-5660 2,500
Eaton Vance Worldwide
Health Sci A
(ETHSX) 14.32 -1.12 800-225-6265 500
Morgan Stanley Health
Sciences B (HCRBX) 8.39 -1.16 800-869-3863 1,000
Kinetics Medical Fund
(MEDRX) 13.39 -6.65 800-930-3828 2,500
SunAmStrat Biotech/
Health 30 A (SBHAX) 15.04 -9.58 800-858-8850 250
Saratoga Health &
Biotechnology B
(SHPBX) -5.30 -18.16 888-672-4839 2,500
ING Partners Salomon
Bros Aggr Gr I
(IMEIX) 4.48 -24.75 888-238-6243 0
IDEX T. Rowe Price
Health Sciences A
(IRHAX) 13.42 N/A 888-233-4339 1,000
AMIDEX Cancer
Innovation &
Healthcare (F008QD) 19.36 N/A 888-876-3566 500
* AS OF JUNE 27, 2003.
SOURCE: MORNINGSTAR INC.
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