Three of the Best Biotech ETFs to Own Now
Some of the greatest investment opportunities have been found in biotech.
For proof, just look at these biotech-related ETFs.
Over the last 10 years:
- The iShares NASDAQ Biotech ETF (IBB) ran from $20 to $122.
- The Pro Shares Ultra NASDAQ Biotech (BIB) ran from $5 to $70.
- The SPDR Biotech S&P (XBI) ran from $13 to $100.
- The Van Eck Vectors Pharmaceuticals ETF (PPH) ran from $18 to $63
That growth may not slow for quite some time for three reasons.
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Again, though, we need confirmation.
Reason No. 1 – Mergers and Acquisitions
In 2017, biotech mergers soared 27%, reaching $332 billion in value. Bain & Co. analysts forecast that the soaring trend will extend through 2018.
Then, in just the first quarter of 2018, merger activity rose 16% year over year.
Merger activity is likely to push production rates higher and raise industry profits.
Celgene’s agreed takeover of Impact Biomedicines in a deal worth up to $7 billion, Takeda Pharmaceutical’s plan to buy TiGenix for $630 million, and a recent announcement that Sanofi will buy Ablynx for $4.8 billion got 2018 off to quite a start, according to Reuters.
Better yet, according to consultancy firm EY, we could see $200 billion worth of deals in 2018.
Reason No. 2 – Impressive New Innovation
“The sector is really vibrant at the moment with exciting tech that can deliver medicines to patients in new ways like gene and cell therapy,” said Polar Capital portfolio manager David Pinniger, as quoted by International Adviser.
Look at Fate Therapeutics (FATE), for example, which is running on news that a patient was treated in a Phase I study combining FATE-NK100 with either Herceptin or Erbitux (both monoclonal anti-body chemotherapies used in cancer treatment) to treat advanced solid tumors. While it’s still too early to judge potential success of the drug combination, analysts believe it holds significant promise in treating cancer. There’s hope the combination of the FATE-NK100 therapy with other monoclonal drugs could be quite effective.
And of course, we can’t forget about catalyst No. 3, our aging population.
Reason No. 3 – Our Aging Population
More than 65 million people over the age of 70 in the United States. As this number continues to grow, we’ll see a need for more medication and treatment options. That’s a significant amount of potential demand. These three catalysts alone are contributing to a multi-year boom that’s not likely to fade any time soon.
We can clearly see this group’s impact on stocks.
One of the best ways to gain exposure to the booming sector is with ETFs.
iShares NASDAQ Biotech ETF (IBB)
The IBB tracks biotech and pharmaceutical stocks listed on the NASDAQ. Some of its top holdings include Biogen Inc, Gilead Sciences, Amgen Inc. Celgene Corporation, Regeneron Pharmaceuticals and Mylan.
Pro Shares Ultra NASDAQ Biotech (BIB)
The BIB seeks a return that is 2x the return of an index (target) for a single day, as measured from one NAV calculation to the next. Some of its top holdings include Illumina Inc, Celgene Corporation, Amgen Inc., Nektar Therapeutics, and Jazz Pharmaceuticals.
SPDR Biotech S&P (XBI)
The XBI tracks to total return performance of the S&P Biotechnology Select Industry Index. Some of its top holdings include Intercept Pharmaceuticals, Sarepta Therapeutics, Regeneron Pharmaceuticals, and Heron Therapeutics.
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