On the mend.Healthcare mutual funds experience long recovery; biotech funds shine It was like an extended hospital stay for several healthcare mutual funds since last year, as most sectors--from pharmaceuticals to health maintenance organizations--continue to suffer from chronic under-performance. One big exception: biotechnology stocks, and funds that invest in companies like Amgen (Nasdaq: AMGN). In fact, pure biotechnology sector portfolios were at the top of the heap of healthcare funds in the first quarter while others with a high concentration in biotech picks also posted good returns. Healthcare stock funds had an average total return of 45.65% for the year through March 31, 2000, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Chicago-based mutual fund research firm Morningstar. And biotech-heavy funds continue to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, other healthcare portfolios. Excitement over potential blockbuster drugs A blockbuster drug is a drug generating more than $1 billion of revenue for its owner each year. The search for blockbusters has been the foundation of the R&D strategy adopted by big pharmaceutical companies, but this looks set to change. and the completion of the Human Genome The human genome is the genome of Homo sapiens, which is composed of 24 distinct pairs of chromosomes (22 autosomal + X + Y) with a total of approximately 3 billion DNA base pairs containing an estimated 20,000–25,000 genes. Project, a complete mapping of the human genetic structure, by 2003, is driving investor interest in the sector, says Emily Hall, analyst with Morningstar. For managers who run biotech funds in particular, finding companies with strong product pipelines and earnings growth is crucial to their performance. Kurt von Emster, portfolio manager of the $1.4 billion Franklin Biotechnology Discovery Fund (Nasdaq: FBDIX) is looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. companies with new drugs that are likely to be approved by the Food & Drug Administration in the next two to five years, which combat major diseases like cancer and cardiovascular illnesses. His approach helped Franklin Biotechnology Discovery garner a return of 41.40% in the first quarter, according to Morningstar. He's invested 4% of the fund's assets in Abgenix (Nasdaq: ABGX), making it the top holding. The company has a patented technology to genetically engineer mice with human genes called Xeno Mouse. The mice are exposed to certain diseases, and the antibodies they produce to fight those diseases are then developed into drugs. Its most promising product is a psoriasis psoriasis (sôrī`əsĭs), occasionally acute but usually chronic and recurrent inflammation of the skin. The exact cause is unknown, but the disease appears to be an inherited, possibly autoimmune disorder that causes the treatment that's in Phase II clinical trials Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II . Some of his other major holdings include Amgen (Nasdaq: AMGN) and Inhale in·hale v. 1. To breathe in; inspire. 2. To draw something such as smoke or a medicinal mist into the lungs by breathing; inspire. Therapeutic Systems (Nasdaq NM: INHL INHL Institute for Nursing Healthcare Leadership ). Faraz Naqvi, portfolio manager for the $450 million Dresdner RCM RCM Reliability-Centered Maintenance RCM Royal College of Music RCM Royal Conservatory of Music RCM Royal Canadian Mint RCM Reliability Centered Maintenance RCM Revenue Cycle Management RCM Regional Climate Model RCM Ring-Closing Metathesis Biotechnology fund (Nasdaq: DRBNX), says an important key to outperforming his peers is estimating which parts of the biotech universe are attractive, and when. "It's just guessing when market swings will occur," says Naqvi, himself a physician. "In 1999, first it was large caps [that were in favor], then genomics, then small caps See Small capital . And right now, the bulk of our portfolio is in small caps and genomics," since large-cap biotech stocks have already enjoyed a decent run-up. Genomics biotech firms use sophisticated gene therapies to develop drugs. Among Dresdner's top holdings as of late February: Millennium Pharmaceuticals Millennium Pharmaceuticals NASDAQ: MLNM is a biotechnology company based in the Cambridge, Massachusetts area of the United States of America. Founded in 1993, the company conducts research in various scientific areas, currently focusing on inflammation and oncology. (Nasdaq: MLNM), Human Genome Sciences Human Genome Sciences NASDAQ: HGSI is a biopharmaceutical corporation founded in 1992. Its stated purpose is to "discover, develop, manufacture and market innovative drugs that serve patients with unmet medical needs, with a primary focus on protein and antibody drugs. (Nasdaq: HGSI HGSI Human Genome Sciences, Inc. (Rockville, MD) ) and Protein Design Labs (Nasdaq: PDLI PDLI Protein Design Labs, Inc. PDLI Project Directive Line Item ). And while his fund is strictly a pure play on biotech, he does invest in related companies like e-commerce health research firms Chemdex (Nasdaq: VNTR VNTR Variable Number of Tandem Repeat(s) ) and Sciquest.com (Nasdaq: SQST). Dresdner RCM Biotechnology had a total return of 36.41% in the first quarter. But before you start loading up on biotech or healthcare funds in search of juicy 100%-plus returns, break out the antacid antacid, any one of several basic substances that counteract stomach acidity (see stomach). Antacids are used by physicians to treat hyperchlorhydria, i.e., the excessive production of hydrochloric acid by the parietal cells lining the stomach. . Sector funds in general are extremely risky. That's particularly true of healthcare portfolios whose fortunes hinge on Verb 1. hinge on - be contingent on; "The outcomes rides on the results of the election"; "Your grade will depends on your homework" depend on, depend upon, devolve on, hinge upon, turn on, ride such unpredictable factors as government regulation and failed clinical trials, notes Morningstar's Hall.
TOP 5 HEALTHCARE STOCK FUNDS
1-Year
Year-to-date Total
Fund Name (Ticker) Total Return Return(*)
Franklin Biotechnology Discovery 41.40 195.51
(FBDIX)(**)
Monterey Murphy New World Biotech 40.99 83.76
(MNWBX)
Eaton Vance Worldwide Health Sciences 36.60 79.42
(ETHSX)
Dresdner RCM Biotechnology 36.41 194.93
(DRBNX)
Orbitex Health & Biotechnology 32.61 N/A
(ORHAX)
Healthcare Stock Fund Averages 45.65 44.88
3-Year 5-Year
Fund Name (Ticker) Total Return Total Return
Franklin Biotechnology Discovery N/A N/A
(FBDIX)(**)
Monterey Murphy New World Biotech 17.40 10.01
(MNWBX)
Eaton Vance Worldwide Health Sciences 30.84 32.41
(ETHSX)
Dresdner RCM Biotechnology N/A N/A
(DRBNX)
Orbitex Health & Biotechnology N/A N/A
(ORHAX)
Healthcare Stock Fund Averages 22.94 21.02
Minimum
Toll-Free Initial
Fund Name (Ticker) Number Investment
Franklin Biotechnology Discovery 800-342-5236 Closed
(FBDIX)(**)
Monterey Murphy New World Biotech 800-251-1970 $1,000
(MNWBX)
Eaton Vance Worldwide Health Sciences 800-225-6265 1,000
(ETHSX)
Dresdner RCM Biotechnology 800-726-7240 5,000
(DRBNX)
Orbitex Health & Biotechnology 888-672-4839 2,500
(ORHAX)
Healthcare Stock Fund Averages
(*) Ranked by cumulative total return as of 3/31/00. (**) Fund closed to new investors; available through retirement accounts only. Source: Morningstar, Inc.
BOTTOM 5 HEALTHCARE STOCK FUNDS
1-Year
Year-to-Date Total
Fund Name (Ticker) Total Return Return(*)
Fidelity Select Medical Delivery (FSHCX) -6.33 -15.98
Invesco Health Sciences (FHLSX) 1.15 1.04
Fidelity Select Health Care (FSPHX) 3.29 -1.65
Fidelity Advisor Health Care (FACDX) 3.49 2.35
AIM Global Health Care (GGHCX) 5.82 2.59
Healthcare Stack Fund Averages 45.65 44.88
3-Year 5-Year
Total Total
Fund Name (Ticker) Return Return
Fidelity Select Medical Delivery (FSHCX) -9.09 -0.38
Invesco Health Sciences (FHLSX) 20.94 22.08
Fidelity Select Health Care (FSPHX) 22.59 23.30
Fidelity Advisor Health Care (FACDX) 23.80 N/A
AIM Global Health Care (GGHCX) 15.88 17.40
Healthcare Stack Fund Averages 22.94 21.02
Toll-Free
Fund Name (Ticker) Number
Fidelity Select Medical Delivery (FSHCX) 800-544-8888
Invesco Health Sciences (FHLSX) 800-525-8085
Fidelity Select Health Care (FSPHX) 800-544-8888
Fidelity Advisor Health Care (FACDX) 800-522-7297
AIM Global Health Care (GGHCX) 800-959-4246
Healthcare Stack Fund Averages
Minimum
Initial
Fund Name (Ticker) Investment
Fidelity Select Medical Delivery (FSHCX) $2,500
Invesco Health Sciences (FHLSX) 1,000
Fidelity Select Health Care (FSPHX) 2,500
Fidelity Advisor Health Care (FACDX) 2,500
AIM Global Health Care (GGHCX) 500
Healthcare Stack Fund Averages
(*) Ranked by cumulative total return as of 3/31/00. Source: Morningstar Inc. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion