Diane Alter: Biotech ETFs have been the focus of many investors this week after Valeant Pharmaceuticals Intl. Inc. (NYSE:VRX) shares dropped more than 46% last week.
One biotech ETF with Valeant as a holding has slumped 8.4% in the past three months, as VRX stock continues to fall.
Since August, shares of the drug giant – dubbed by short seller Citron Research as “pharma’s Enron” – have plunged 56%. Year to date, VRX stock is down 22.4%.
VRX shares slipped another 9% Monday morning. The slump came after a conference call with analysts defending the firm’s business and dealings failed to calm investors.
Fortunately for many investors, a number of biotech ETFs were able to weather the storm. That’s because Valeant isn’t part of the Nasdaq Biotechnology Index. So last week’s decline in the Valeant stock price didn’t impact ETFs that track the widely followed benchmark.
This is why investing in biotech ETFs is a good choice for investors looking for a safer way to enjoy biotech profits with lower risk than buying a biotech stock.
But Valeant’s recent drop is a stark reminder of why it’s important to know what’s in an ETF before making an investment.
Here are seven biotech ETFs that have been crushed by the Valeant stock price drop and three biotech ETFs that don’t invest in Valeant if you’re looking for another play…
7 Biotech ETFs Getting Crushed by Valeant Stock
The Vanguard FTSE All-World ex-US ETF (NYSE Arca: VEU) holds the largest dollar amount of Valeant shares with $12,787,329, or a 0.09% weighting. VEU shares are down 3.31% over the last three months and off 2.5% year to date.
The Market Vectors Pharmaceutical ETF (NYSE Arca: PPH) has a 2.35% Valeant weighting. Shares are off 0.32% over the last month and down 11.95% over the last three.
The PowerShares DWA Developed Markets Momentum ETF (NYSE Arca: PIZ) has a 1.3% Valeant weighting. Shares are off 4.23% over the last three months and down 3.75% year to date.
The Global X Funds ETF (NYSE Arca: GURU) has a 1.15% Valeant weighting. Shares are down 8.39% over the last three months and off 8.85% year to date.
The Guggenheim Insider ETF (NYSE Arca: NFO) has a 0.49% Valeant weighting. Shares are down 3.16% over the last three months and off 3.59% year to date.
The First Trust Value Line 100 Fund (NYSE: Arca: FVL) has a 0.46% Valeant weighting. Shares are off 4.17% over the last three months and down 3% year to date.
The Global X Guru Activist ETF (NYSE Arca: ACTX) has a 0.93% Valeant weighting. Launched in April, shares are down 6.05% over the last three months and off 11.05% since its inception.
Now here’s a look at biotech ETFs that don’t hold Valeant stock – and are all up for the year: