Biotech ETFs Holding Up During Rocky November

ETF Trends

Investors got a much-deserved relief rally Monday on hopes the Obama administration and Congress will be able to hammer out a deal to avoid the fiscal cliff before the deadline.

In November, the equities market has been weakening as investors pulled out of stocks ahead of the looming fiscal cliff, but the biotechnology sector and exchange traded funds have held up surprisingly well amid the broader sell-off. President Obama’s re-election has helped the healthcare sector as the Affordable Care Act looks secure.

For instance, so far this month, iShares Nasdaq Biotechnology Index Fund (IBB) has outperformed the broader market as measured by SPDR S&P 500 (SPY) .

The sector’s lack of dividends and stable earnings have helped it dodge the current panic selling, writes Eric Dutram for Zacks. Dividend sectors such as utilities have been hit recently on fears investors will end up paying higher taxes next year.

Biotech sector ETFs include:

  • The iShares Nasdaq Biotechnology Index Fund comes with a 0.48% expense ratio and holds 120 stocks. Top names in the company include Regeneron Pharma (REGN), Amgen (AMGN) and Gilead (GILD).
  • SPDR S&P Biotech ETF (XBI) has a 0.35% expense ratio and holds a little under 50 stocks. The fund follows a more equal weight approach, with top three holdings BioMarin (BMRN), GILD and Myriad Genetics (MYGN). XBI is down 1.1% over the past week.
  • First Trust AMEX Biotechnology Index Fund (FBT) has a 0.60% expense ratio.  The fund leans toward micro- and small-cap stocks as it also follows a more equal-weight style. Top holdings include MYGN, BMRN and Sequenom (SQNM). FBT is down 0.5% over the past week.
  • Market Vectors Biotech ETF (NYSE MKT: BBH) has a 0.35% expense ratio. The ETF leans toward large-cap stocks, with AMGN, GILD and Biogen (BIIB) accounting for about 35% of the fund. BBH is up 1.6% over the last week.

For more information on the biotech sector, visit our biotechnology category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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