Bio-Tech funds

pip895

planteria wrote: »

who frowns upon it, and why?

Apparently its all but impossible for a mere mortal to time the market and we shouldn't try.


I will say though it does need a bit of discipline - it is remarkably easy to take on too much risk just when you shouldn't and vice versa.

trinard

You must have deep pockets to deal with Salty Dog.
How long have you been with them and whats your view on the experience.
I was on their chase list for a while, took some getting rid of.

bowlhead99

pip895 wrote: »

AXA Framlington Biotech has an initial spread which makes it a higher risk proposition for short term investing. It dose tend to be frowned upon by many, but I find it gives me a good return at low volatility.

I had to :rotfl: at 'low volatility', in a fund that is up 64.8% IN ONE CALENDAR YEAR.

Likewise, the Biotech Growth Trust (BIOG) which I hold is up 220% over three years, not counting any income. Sure, heathcare and emerging technologies are areas of potential growth given changing long-term demographics, but a lot of bio firms still fail and it is not like the world's investors are unaware of those changing demographics and would not have at least in some way priced them in after a few years of being in 'risk: on' mode.

Perhaps you are guilty of thinking that any fund that has done well over the short term periods you are trading in and out, "gives a good return at low volatility". Sure, in recent years it has generally been up on the back of market sentiment, and you would have done well if you bought BIOG 10 years ago, up 400% even excluding divs reinvested - probably not so much one for the traders but fine for those who can take a long term view on specialist funds as a small fraction of their portfolio. But it is disingenuous to say funds like these are not volatile, when their level a year ago was less than two thirds of what it is today. If fortune changes, they will be back there, or worse, in shorter timescales.

Clearly a return of one to five multiples of cost over a five- or ten-year cycle is very nice. But this is the same BIOG that dropped 75-80% from 2000-2003. So, the high risk of the sector is not for widows or orphans or anyone who might need to get at the funds in a reasonable timescale (whether the reason to want the cash back is to spend or to reinvest in a different tasty fund opportunity). By contrast some healthcare generalists can be quite bland but solid dividend payers with good long-term prospects if they can keep reinvesting in patents and capacity.

C_Mababejive

Is it me..or is it the case that mostly when you look at funds,most of the graphs miraculously point upwards...

bigadaj

C_Mababejive wrote: »

Is it me..or is it the case that mostly when you look at funds,most of the graphs miraculously point upwards...

Well they are generally positive as total returns tend to increase year on year.

But yes, any advertised graph will point upwards due to the time period over which the provider has selected, easily solved by using trustnet or Morningstar and putting your own time periods in of course.

SlapShot

musashi10 wrote: »

I wanted to ask what were the main drivers of this growth?

Are there any reasons as to why this trend may not continue for the next few years?

Be careful what you mean when you say "growth". You observe share-price appreciation and I'm guessing are calling this growth, whereas this actually has two components: growth in the underlying business; (positive) change in the valuation of biotech companies. I've been invested in biotech for a few years now (~2006) - for sure, in this time, there has been steady growth in the businesses, but more dramatically, there has been a large change in the valuations of biotech companies. Even a few years ago, biotech was relatively cheap (e.g. on price/sales measures), and now it's looking on the expensive side. There is a story (there always is!): cash-rich big pharma; patent expiry; a spike in new drug trials. But fundamentally, unless you think you can time the market, buying a sector in the expectation that it will continue to go up is not a sensible strategy; buying sectors when they are cheap, however, is. I'd caution whether biotech is cheap currently; it may continue to go up, but that's a different story!

planteria

SlapShot wrote: »

Be careful what you mean when you say "growth". You observe share-price appreciation and I'm guessing are calling this growth, whereas this actually has two components: growth in the underlying business; (positive) change in the valuation of biotech companies. I've been invested in biotech for a few years now (~2006) - for sure, in this time, there has been steady growth in the businesses, but more dramatically, there has been a large change in the valuations of biotech companies. Even a few years ago, biotech was relatively cheap (e.g. on price/sales measures), and now it's looking on the expensive side. There is a story (there always is!): cash-rich big pharma; patent expiry; a spike in new drug trials. But fundamentally, unless you think you can time the market, buying a sector in the expectation that it will continue to go up is not a sensible strategy; buying sectors when they are cheap, however, is. I'd caution whether biotech is cheap currently; it may continue to go up, but that's a different story!

a very interesting point. to be honest, i have just planned to continue to back the Axa fund, as it has done well for me. it has not really even come onto my 'could i do better elsewhere?' radar.........but i believe in the 'Story' of biotech too. Biotechnology is an area of science which is pushing boundaries, coming up with useful new drugs and products, and creating wealth. so i have tended to think that that sector can do well, long-term, too.

SlapShot

The story only makes you money if: a) it's true and genuinely profitable; b) you don't overpay for it. (I.e. valuation matters!). I still have a large chunk of biotech (~8% of my total portfolio) but have top sliced and will continue to do so as this runs on.

pip895

bowlhead99 wrote: »

I had to :rotfl: at 'low volatility', in a fund that is up 64.8% IN ONE CALENDAR YEAR.

Sorry I didn't mean to suggest the axa fund had low volatility -far from it !!!:rotfl:


Short term trading ala salty dog is relatively non volatile - I don't use his data but follow the general principal using free trustnet data.:)

pip895

Back to the original thread - anyone come across/invest in - International Biotech Trust (IBT). It has been underperforming relative to its pears although it has picked up in the last couple of weeks and is currently on a discount of over 17%. Thought it might be worth a punt?