Originally Posted by
boneil
For me, the most important thing when looking at a fund are the holdings. Past performance is almost irrelevant to me. Most of the time past perf is used as a selling point and obviously there is no way to know how it will perform in the future. The medical field, I feel, is one of the best places to invest. People will always need their medicine.
About this particular fund. If you have had it, I would continue to hold onto it and maybe cut some of it. But I probably would not start a position in it today or add more money to it. It's sitting at all time highs. Many of the top holdings have performed very well over the last several years. And there are some very high P/E multiples. I would want to know what firms are holding how much stock of these individual names. There are activists involved in atleast one of the stocks. VRX. That may play a role in how long I would hold. These stocks, biotechs, are usually pricing in good, future data and pricing on drugs. It just takes a little bad news, like a law change with generic drugs, to cause a dramatic affect. A failed drug trial or an FDA ruling will also play a role.
I do like the risk associated with this fund and think this is a good alternative to buying individual names, for the avg investor. But would need to know the other holdings because the multiples of some of these stocks are a little rich for me.
Also, I might look into the IBB, nasdaq biotech.