One sector that has held up very well amid weakness in the overall market is biotech. In fact, ETFs tracking the biotech stocks remain near all-time highs on successful drug trial tests and some investors positioning for deals in the sector.
The iShares Nasdaq Biotechnology (IBB - News) is up 21.2% year to date, more than doubling the 8.5% return of SPDR S&P 500 (SPY - News), according to Morningstar.
The investment researcher notes that biotech ETFs were standout performers last week .
“Vertex Pharmaceuticals (VRTX - News), a core holding in four of the funds, rose more than 50% in one day after positive results in a study involving a two-drug therapy it has developed to treat cystic fibrosis, an incurable genetic disease,” it said.
Other sector ETFs include SPDR S&P Biotech ETF (XBI - News), First Trust Amex Biotechnology (FBT - News) and Market Vectors Biotech ETF (BBH - News). [Choosing the Right Biotech ETF Exposure]
Biotech ETFs enjoyed a huge rally in January to break out to record highs. The sector has also displayed relative strength during the recent market pullback on Eurozone debt worries. [Biotech ETFs Break Out]
“The jarring pace of change, single-product liability, regulatory uncertainties, and intellectual property rights make picking stocks in the biotech sector a high-risk/high-reward proposition,” says Morningstar analyst Robert Goldsborough. “As such, we think investing in the industry via an ETF makes a lot of sense; it’s an extremely low-cost way to gain diverse exposure to the industry in one trade.”
iShares Nasdaq Biotechnology
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