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Doomsday ETF: Buffett’s Biotech Bet

Written on April 17, 2008 by Ryan Freund

According to a recent Yahoo! Finance TechTicker video and article, Warren Buffet and George Soros are making large bets in Healthcare and Biotech companies. Large stakes have been taken in Glaxosmithkline, Sanofi-Aventis, and Johnson & Johnson, to name a few.

Buffett and Soros, according to the article, are betting heavily that the need for vaccines will grow significantly in the next decade or so. These vaccines will be needed to treat an increasing aging population, as well as to protect against influenza outbreaks (including the infamous SARS).

How does one hop on board with Buffett and Soros in this endeavor? One of the easiest - and cheapest - ways is by purchasing shares of the iShares S&P 500 Global Healthcare (IXJ) exchange traded fund (ETF). This ETF tracks all of the funds listed in the aforementioned article, as well as a host of smaller promising biotech companies. The top 10 holdings of this ETF are as follows (percentage listed is % of the fund):

  1. Johnson and Johnson (JNJ): 8.75%
  2. Pfizer (PFE): 6.74%
  3. Novartis AG: 6.65%
  4. Roche Ltd.: 6.29%
  5. Glaxosmithkline (GSK): 5.52%
  6. Abbott Laboratories (ABT): 4.03%
  7. Merck (MRK): 3.91%
  8. Sanofi-Aventis (SAN.PA): 3.71%
  9. Wyeth (WYE): 2.64%
  10. AstraZeneca PLC ADS (AZN): 2.58%

In addition, the iShares ETF has a miniscule management fee (0.49%) and this is offset nicely by a 1.9% dividend yield.

Freund Investing Managing Member Ryan Freund holds no position in any of the companies mentioned in this article. Freund Investing has a solid Disclosure Policy.


Written by Ryan Freund · Filed Under Investing Strategies |  

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