So I am NOT a proponent of extreme risky stocks like biotech. I'm not knowledgeable enough in the area to feel confident in picking specific companies. There are also so many factors that could instantly wipe out the entire investment in a biotech company.
HOWEVER the sector clearly also has huge opportunity for growth. So it got me thinking, perhaps biotech ETFs would be a decent option. I'm only 19 so I don't think a bit of risk is a bad thing, and my portfolio is set up for the long haul.
The particular ETF I am looking at is XBI, however there are also some others. But with XBI for example there are about 120 holdings, and therefore the risk of investing in just one of those companies goes away. That's not to say it's not risky. It still will be a highly volatile sector, but I'm prepared to deal with volatility and can handle it fine. With the huge opportunity for growth though, I don't see many downsides in this type of investment compared to other sectors. And for my current financial goals I think adding this might be a good thing to do.
For every biotech company that fails in the ETF, there will be others that succeed. And I believe that over time the successes should outweigh the failures to result in big growth, and that is well backed up by historical returns.
So is there something I'm overlooking here? Is there any extremely risky thing about investing in this type of ETF that I'm not aware of? Like I said, volatility is not an issue. I'm very level-headed and would not be concerned at all about me panic selling anything. To add, are there any ETFs that I could look into that would be better than XBI, perhaps with a lower expense ratio or a more diversified portfolio?
Thanks in advance!
Submitted April 07, 2019 at 01:38AM by multiple4 http://bit.ly/2U2sVU6
