Framlington has established the Framlington biotech Isa, a unit-trust based Isa that invests in the company's recently introduced biotech fund.
The Framlington biotech fund aims to produce capital growth by investing in a portfolio of around 70 stocks within the biotechnology, genomics and medical research industries. It is managed by the same team responsible for the Framlington health fund, headed by Antony Milford. He will look for well established companies with drugs and treatments that are undergoing the final trial stages or that are registering their products.
The biotech fund invests worldwide, between 80 and 85 per cent goes into the US, while the rest is invested in Europe including the UK. Most biotechnology companies are based in the US, which explains the country's dominance in a global fund.
As people are living longer and are more conscious of health issues, they are increasingly relying upon medicines and treatments. Without medical research including biotechnology and genomics, which is the study of human genes, it would be difficult to meet this demand.
This makes biotech funds attractive in terms of future growth prospects and as share prices are still low, investors could benefit from price increase when a recovery occurs. However, the fund may be too risky for some investors because this sector is notoriously volatile and there is no guarantee the companies will make it through the trial and registration stages with their products.
According to Standard & Poor's the Framlington healthcare fund is ranked 2 out of 23 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to January 11, 2002.