Headline: FUND SCORE-Healthcare/Biotech funds catch cold after hot 2000
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By Svea Herbst-Bayliss
NEW YORK, Aug 6 (Reuters) - Mutual funds that invest in
health care and biotechnology stocks were last year's market
darlings but are struggling with losses this year because the
downturn among tech stocks has also infected this sector.
The 153 funds that buy stock in firms that make products
ranging from bandages to drugs that battle rare diseases, lost
an average 4 percent in value over the four weeks ended July
31, according to fund tracker Lipper Inc.
While the funds performed slightly better than the average
sector equity fund which fell 4.81 percent during that time,
they ranked near the bottom of the pack with only the science
and technology funds and telecommunications funds doing worse.
For investors, there has been a sea-change since last year.
Then the funds returned 54.69 percent and ranked as the hottest
investment of 2000, but this year they are down 14.76 percent
since January.
Now the funds that specialize in stocks once labeled safe
plays because people get sick during all economic conditions
have caught a cold themselves.
But portfolio managers and analysts blame most of the
decline in the sector on biotechnology stocks which have
slumped alongside other tech listings since the market soured
last year when growth began to slow in the United States.
"Biotech has been hit by same factors that have hit
technology sector," said Shawn Lytle, co-manager of the $34.5
million JP Morgan Global Healthcare Fund, the month's second
best performer with a 2.99 percent gain.
"While many biotech firms have strong balance sheets and
are solid investments for the long term, in the short term they
do get a lot of volatility," he added.
The managers who fared best either pared back their biotech
holdings in favor of drug companies or stuck with the drug
firms and insurers they already held.
"Our main emphasis is pharmaceutical stocks and unlike our
competition, we won't put more than half of the portfolio into
biotech," Lytle said, adding he had just reduced his biotech
holdings. Now his fund has a big bet on Forest Laboratories
Inc. (NYSE:FRX) which last month reported stronger-than-expected
fiscal first quarter profits, boosted by its flagship drug,
antidepressant Celexa.
Meanwhile Dan Gillespie who runs the Rydex Health Care Fund
which ranked as the third best performer with a 2.65 percent
gain during the last four weeks said there was nothing he did
differently in the last four weeks to boost his performance.
"You have to put the whole thing into perspective. For the
second quarter we saw the worst quarterly profits in 10 years
but the drug companies still came out with decent earnings," he
added. His fund with $43.5 million in assets holds Pfizer Inc.
(NYSE:PFE) which co-markets the popular anti-inflammatory drug,
Celebrex, and Merck & Co. Inc (NYSE:MRK), which makes the
arthritis treatment Vioxx.
But the funds that posted the worst performances with
losses of 10 percent or more generally had the word biotech in
their name and loaded up once high-flying biotech groups.
For example, the Franklin Biotechnology Discovery fund, one
of the biggest funds in the sector with $1.09 billion in
assets, was also the second worst performer for the month with
a 10.09 percent loss because of its narrow focus on biotech.
One of the fund's biggest holdings is Inhale Therapeutic
Systems (NASDAQ:INHL) a stock that has lost 69.31 percent in value
since the start of the year. Last month the Food And Drug
Administration signaled that it would require more data to
support the group's new drug application for inhaled insulin.
THE 10 BIGGEST HEALTH/BIOTECHNOLOGY FUNDS: (*)
NAME: ASSETS 1MTH YTD 1YR
(Mil.$)
Vanguard Health Care 17401.7 1.71 -6.91 9.31
Putnam Hlth Sciences;A 3534.0 -0.25 -17.46 -13.57
Fidelity Sel Bio Tech 3388.7 -6.88 -29.33 -29.66
Janus Glbl Life Sciences 2758.0 -1.72 -19.91 -15.84
Fidelity Sel Health 2538.1 2.26 -15.27 -8.24
INVESCO Health Sci;Inv 1768.8 -1.61 -16.86 -9.36
Franklin Str:Biotech Dis 1094.9 -10.09 -25.95 -32.28
T Rowe Price Hlth Scienc 893.2 -3.02 -14.24 -6.3
Dresdner RCM:Biotech;N 757.5 -10.05 -29.41 -27.04
Eaton Vance Ww H&S;A 747.4 -2.39 -12.38 -6.51
Lipper Hlth/Biotch Fd IX 39410.0 -2.21 -12.99 -4.61
S & P 500 Daily Reinv N/A 0.20 -6.87 -14.94
Average/Total 47894.2 -1.89 -14.39 -7.82
THE 10 BEST PERFORMING HEALTH/BIOTECHNOLOGY FUNDS: (*)
NAME: ASSETS 1MTH YTD 1YR
(Mil.$)
Fidelity Sel Medical 151.0 3.24 -1.92 37.29
JPM:Glbl Hlthcare;Sel 34.5 2.99 -12.57 N/A
Rydex:Health Care;Inv 43.5 2.65 -11.51 -3.49
Fidelity Sel Health 2538.1 2.26 -15.27 -8.24
Fidelity Adv Hlth;B 441.3 2.2 -15.63 -9.01
Schwab Cap:Hlth Care Foc 32.1 1.98 -13.42 -4.83
iShares:Dow US Hlthcare 133.6 1.97 -13.89 -5.66
Vanguard Health Care 17401.7 1.71 -6.91 9.31
Alliance Health Care;B 204.2 1.20 -17.66 -12.18
Amer Cent:Lf Sci;Inv 242.8 1.17 -1.91 5.25
Lipper Hlth/Biotch Fd IX 39410.0 -2.21 -12.99 -4.61
S & P 500 Daily Reinv N/A 0.20 -6.87 -14.94
Average/Total 47894.2 -1.89 -14.39 -7.82
THE 10 WORST PERFORMING HEALTH/BIOTECHNOLOGY FUNDS: (*)
NAME: ASSETS 1MTH YTD 1YR
(Mil.$)
Excelsior:Biotech 30.1 -15.35 -26.59 N/A
Franklin Str:Biotech Dis 1094.9 -10.09 -25.95 -32.28
Dresdner RCM:Biotech;N 757.5 -10.05 -29.41 -27.04
GenomicsFund.Com 23.3 -10.09 -39.19 -49.38
iShares:Nasdaq Biotech 131.9 -9.52 N/A N/A
Rydex:Biotech;Inv 381.2 -7.49 -20.81 -25.79
Fidelity Sel Bio Tech 3388.7 -6.88 -29.33 -29.66
Alliance Sel:Biotech;B 224.9 -6.72 -30.93 -36.08
Sunamerica:Bio/Hlth;A 30.6 -6.56 -14.77 -17.65
Monterey:Murphy NW Bio 13.4 -5.95 -34.26 -38.78
Lipper Hlth/Biotch Fd IX 39410.0 -2.21 -12.99 -4.61
S & P 500 Daily Reinv N/A 0.20 -6.87 -14.94
Average/Total 47894.2 -1.89 -14.39 -7.82
Source: Lipper
*Data based on the performance of mutual funds with at least
$10 million in assets under management.
svea.herbst@reuters.com ))
Copyright 2001, Reuters News Service |
