Exchange Traded Funds that invest in stocks of biotech companies have been banking solid gains in the last year and the trend continues. Companies from the biotech industry are involved in the use of biological processes such as recombined DNA technology, genetic engineering, and molecular biology. The sector is considered to have a high potential for the future and had become one the main attractions for investors that try to place their holding in companies that contribute to the development of the future of the world. For those of you that want to get involved, a good way to do it is to trade ETFs that actively invest in these type of companies.
Solid gains were seen in the second half of January 2018.
As of January 22nd, the largest ETFs to track the biotech industry rallied as some billion dollar deals were announced.
The iShares Nasdaq Biotechnology ETF rose approximately 2.5%, reaching 114.90 US dollars, which means it is currently around the highest level since the year 2015. The daily gain is one of the biggest seen in the last few months.
Another high performing ETF is the SPDR fund, which is up around 8% in 2018. It is one of the most popular funds of investors and it has seen more than 200 million dollars in inflow just this year, according to FactSet. For those of you that want to trade ETFs, there are strong signs that institutional investors are watching this kind of asset closely, so the bullish trend could continue higher.
There were, however, some downside risks for the industry in 2017. In the U.S, Republicans’ efforts to dismantle the Affordable Care Act raised some short-term pressure but following the failed effort to implement a new legislation, Biotech companies and ETFs as well resumed the bullish trend. The replacement of the Affordable Care Act is one of President Trump’s main goals and new attempts are expected to be seen in the future. However, at the present time, the President does not have enough support to pass such a bill and investors’ worries are diminished for now.
People that want to trade ETFs can find good opportunities as the market is hot at the moment and optimism is at a very high level.
Risk Warning and Disclaimer
Trading ETFs can carry high levels of risks. You should carefully consider before deciding to invest in ETFs. No information contained in this material should be regarded as a financial advice or investment decision.