With tech earnings arriving, many investors are still likely fearing a downturn for key information technology stocks. The so-called Magnificent Seven stocks delivered significant performance for investors last year. This year, however, with rate cuts drying up and tariffs looming, tech may not perform as well. Another tech sector, however, could be poised to zig when info tech zags, with one tech sector ETF in particular offering a powerful option.
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That tech sector ETF, SBIO, could provide a different but no-less-impactful view into tech. The ALPS Medical Breakthroughs ETF (SBIO ) charges a 50 basis point fee. For that fee, the biotech sector ETF tracks the S-Network Medical Breakthroughs Index. The index takes a market-cap-weighted approach to U.S. biotech firms with one or more drugs in Phase II or Phase III FDA clinical trials.
A Biotech Tech Sector ETF? SBIO's Approach
Those firms must have market caps between $200 million and $5 billion. What’s more, SBIO screens its candidates for cash on hand, targeting companies with enough to last two years.
While the strategy may benefit to some degree form the lagging impact of rate cuts last year, its true case relates to its health focus. Health spending may not be as impacted by a tech-driven market downturn as tech and AI spending may. At the same time, those AI advances could help biotech firms develop new, leading drugs.
SBIO’s focus on biotech firms has helped it return 4.17% YTD, per SS&C ALPS Advisors data as of December 31. What’s more, the strategy may be nearing a buy point. According to YCharts, the fund is nearing “oversold” status at this early point in 2025. That may be due to uncertainty, with the tech sector ETF potentially presenting a solid medium-term opportunity even as other tech firms may drop off.
VettaFi LLC (“VettaFi”) is the index provider for SBIO, for which it receives an index licensing fee. However, SBIO is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SBIO.
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