Forbes - - INVESTING - BY KEN KAM Ken Kam is chief ex­ec­u­tive of Mar­ke­toc­racy, Inc., an as­set man­ager that iden­ti­fies an­a­lysts with su­pe­rior track records.

in­vest­ing in biotech stocks is not for the faint of heart. Com­pa­nies that re­port bad clin­i­cal-trial re­sults can lose half their value in a day. There are two biotech in­dex funds that will give you plenty of diversification at lit­tle cost: the SPDR s&p biotech ETF and the ishares nas­daq biotech­nol­ogy ETF. but since in­dex funds in­vest in biotechs without re­gard for their clin­i­cal-trial data, i don’t rec­om­mend them. it takes ex­per­tise and a lot of time to stay on top of clin­i­cal de­vel­op­ments. That’s why a biotech man­ager with a great track record, like Joseph edel­man, adds a lot of value. among the big­gest biotech mu­tual funds, fidelity se­lect Biotech­nol­ogy, with a ten-year av­er­age re­turn of 18.5% under the stew­ard­ship of man­ager ra­jiv Kaul, is the best bet.

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