As coronavirus cases start to tick upwards once more, the race to create a vaccine will only intensify, boding well for the biotechnology sector. ETF investors may want to keep an eye on biotech funds, which are already garnering interest as 2020 winds down.
“Biotechnology exchange-traded funds outperformed Tuesday as investors focused on next-generation solutions to the coronavirus and more,” a MarketWatch report mentioned. "The ARK Genomic Revolution ETF (ARKG ) was up 2.2% in the early afternoon, on track for its biggest daily gain in nearly three weeks."
“The First Trust NSYE Arca Biotechnology Index Fund (FBT ) and the SPDR S&P Biotech ETF (XBI ) both gained 1.2%," the article said further. “Some of the funds’ biggest holdings also did well on Tuesday: shares of Invitae Corp. and Vertex Pharmaceuticals were each up 2.3%. In the year to date, the SPDR fund has roughly kept pace with the Nasdaq Composite Index, rising nearly 24%, while the ARK fund has more than doubled in value in that time.”
One other ETF to watch is the VanEck Vectors® Biotech ETF (BBH ). The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® US Listed Biotech 25 Index (MVBBHTR), which is intended to track the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment.
Thus far, the fund is up 14% year-to-date and offers investors exposure to:
- Highly Liquid Companies: Index seeks to track the most liquid companies in the industry based on market cap and trading volume
- Industry Leaders: Index methodology favors the largest companies in the industry
- Global Scope: Portfolio may include both domestic and U.S. listed foreign companies allowing for enhanced industry representation
One additional fund to look at for biotech exposure is the iShares Nasdaq Biotechnology ETF (IBB ). IBB seeks to track the investment results of the NASDAQ Biotechnology Index, which contains securities of companies listed on NASDAQ that are classified according to the Industry Classification Benchmark as either biotechnology or pharmaceuticals and that also meet other eligibility criteria determined by Nasdaq, Inc.
The fund generally invests at least 90% of its assets in securities of the index and in depositary receipts representing securities of the index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents.