Nanotech stocks ended a topsy-turvy 2005 in customary style, with a sharp rise in November followed by a dip last month. The turbulence emphasizes the point that, although investor interest in the fledgling sector seems to be growing, returns are far from assured.

Credit: SOURCE: LUX RESEARCH

The Lux Nanotech Index tracks about 30 companies: most of them specialize in nanotechnology equipment or applications, but a few are large manufacturing companies that make use of the new technology.

The index fell slightly over the course of 2005 — and ended the year significantly below its peak value of almost 2,000, attained in April 2004.

Nonetheless, Peter Hebert, founder of New York-based consultancy Lux Research, which compiles the index, claims that the upturn in November bodes well for the new year. Nanotechnology stocks “are starting to outperform the market and we expect that to continue”, he says.

Strong performers towards the end of the year included Westaim, whose stock rose when it said it would stage an initial public offering of shares in its daughter company Nucryst. The Massachusetts-based subsidiary makes wound dressings, based on silver nanoparticles, that fight infection and inflammation.

The offer took place on 22 December and raised US$45 million. But it provided no cash-in for initial investors, whose shares on the Nasdaq have since remained stubbornly stuck at their opening price of $10.

Accelrys, a San Diego company that sells software to help others apply nanotechnology, also surged in value after announcing a nanobiology initiative that will be chaired by top biologist Leroy Hood.