Demand on Biotech Stocks Rise Due to Fears of a Pandemic

Demand on Biotech Stocks Rise Due to Fears of a Pandemic

The world’s major economies are in danger of collapse again. While China managed to stay afloat more or less after its initial downfall since the virus outbreak, other countries may have to endure the same experiences soon. The sites of epidemy are almost paralyzed, causing the fallback of manufacturing, which will ultimately influence badly on the economies.

Amidst such chaos, Biotech stocks are growing more and more popular. Some people think that it’s wise to invest in stocks, which work to create a vaccine against the virus. However, during the Ebola outbreak in 2015, Daniel Ward, a famous biotech analyst, compared the performances of all biotech companies that had started to develop a vaccine against Ebola.

According to his studies, if equal amounts were invested in each of these companies, an average investor would have lost money. But there were also those stocks, which managed to gain massive amounts. So, at the end of the day, or quarter, in this case, it all depends on the quality of the choice investors make.

Often, investing in small companies proves very profitable in the long term. But when one chooses to gain from short-term events, there are always higher risks. And the governments also provide funding for those companies, which are working on a vaccine against the coronavirus.

Which stock would be a good choice in such a situation?

There are quite a lot of Biotech stocks to choose from. However, the experts recommend the iShares Nasdaq Biotechnology ETF, which invests in large-cap health care stocks. It is one for those companies, which have a real potential to benefit from the development of a vaccine against the coronavirus.

Furthermore, analysts caution that there is always a risk that something goes wrong. So, they advise taking into notice the FDA’s recommendations and evaluations of the companies’ projects. The big name-holdings of the iShares Biotechnology fund have lots of trials in the last stage. So, even if they fail to make a vaccine, they could still profit due to the other schemes.