Biotech ETFs Weather Market Storm

ETF Trends

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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