Is now the time to consider biotech ETFs? The stars may be aligning for investing in biotech as 2025 draws to a closer, with ETFs a key route into the space. Falling interest rates and cheaper borrowing as well as the sheer power of computer-aided innovation may be setting the stage for biotech as an appealing investment. One particular stock has produced rock star returns for investors this year and captures some of those key trends.
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That stock, Guardant Health (GH) has returned an eye-watering 204% YTD according to YCharts. The company provides oncology tests emphasizing genetic testing. Its proprietary blood tests, data sets, and analytics have made its tests quite popular. Intriguingly, the fund has returned some 50% in the last month alone, a spike following a strong earnings beat.
Biotech ETFs Benefitting from Key Trends
That earnings beat helps capture an overall moment of potential positives for biotech and biotech ETFs. The Fed’s latest rate cut may potentially augur even further cuts that could continue to help biotech. Furthermore, AI’s advancements can empower not only the testing suites provided by a firm like GH but also other companies’ R&D capabilities.
Which biotech ETFs, then, can harness the tailwinds that can benefit biotech? The Future Health Care Equity ETF (GDOC ) can contend for the standout option. GDOC charges a 75 basis point (bps) fee for its approach. The biotech ETF actively invests in those key innovators in areas like GH’s precision medicine as well as genomics and digital healthcare. GDOC’s management applies fundamental research to aid its active approach.
That has helped GDOC return 9.1% over the last month per ETF Database data, beating its ETF Database Category average. The fund has benefitted from investing in GH and capturing some of those strong trends, but its largest-weighted stock, Eli Lilly (LLY), has contributed significantly as well. LLY has returned 6.8% in the last month, spiking with its own manufacturing expansion. Together, biotech ETFs like GDOC, with exposure to rising names like GH, could be poised for a positive end to 2025 and worth investor consideration.
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