Top-Performing Biotechnology ETFs Amid Coronavirus Outbreak

Sweta Jaiswal, FRM

The coronavirus outbreak seems to get severe in the United States as more than 3.3 million cases have been recorded with a death toll of at least 135,205. Globally, 12.9 million confirmed coronavirus cases have been registered already. Looking at the spike in cases, people worldwide are waiting for a vaccine or treatment to combat the pandemic.

In such a scenario, the biotechnology sector has emerged as the most sought after space by investors and it has kept its promise for solid returns so far. The S&P Biotechnology Select Industry Index has gained 20.5% to date against the broader S&P 500 Index’s loss of 1.4%. From vaccine-related positive news to progress in the development of cell therapies for treating coronavirus, all kept the sector surging.

Positive development in coronavirus vaccine research recently fuelled the Wall Street rally. Pfizer (PFE), which is working with its Germany-based partner BioNTech, informed that one of its four candidates for the coronavirus vaccine has successfully generated neutralizing antibodies in all participants, who were given two of the 10 or 30 microgram doses after 28 days (per a CNBC article).

Pfizer is aiming to start its mid-stage trial by as early as this month. It is worth noting here that, Pfizer is targeting to produce up to 100 million doses by the end of this year and more than 1.2 billion doses by 2021-end.

The first company to start human clinical trials of its coronavirus vaccine candidate in the United States — Moderna (MRN) — is expected to initiate the final-stage clinical trial in July.

Going on, Vaxart, Inc.’s (VXRT) oral COVID-19 vaccine candidate has been picked up for investigation in a non-human primate challenge study. The new study will be organized and funded by Operation Warp Speed (“OWS”), which is a new national program, to provide substantial quantities of safe, effective vaccine for Americans by January 2021. Notably, the five shortlisted companies under the OWS initiative to rapidly develop a coronavirus vaccine are Moderna, Oxford University and AstraZeneca (AZN), J&J (JNJ), Merck (MRCK) and Pfizer, per The New York Times report.

Notably, AstraZeneca, which is developing coronavirus vaccine in collaboration with Oxford University, also expects to begin late-stage studies if data from the phase I/II study, expected to be released shortly, is successful.

Infectious disease expert, Dr. Anthony Fauci, is mildly expecting scientists to develop a safe and effective COVID-19 vaccine by early 2021, per a CNBC article. According to the World Health Organization, more than 100 vaccines are currently under development. Notably, the FDA has issued guidance documents for companies that are developing a vaccine to prevent coronavirus in order to get approval for the same. The guidance specifies the data that the companies need to submit in order to get approval for their COVID-19 vaccines.

Biotech ETFs Up More Than 20% YTD

The race to introduce vaccine and treatment for the coronavirus is opening up opportunities, making the biotech sector a prospective space for investments. Therefore, we discuss a few ETFs that provide exposure to the biotech sector and have jumped more than 20% year to date:

ARK Genomic Revolution ETF ARKG — up 66.2% year to date

The fund is an actively managed ETF that seeks long-term growth of capital by investing under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies across multiple sectors including health care, information technology, materials, energy and consumer discretionary, that are relevant to the Fund’s investment theme of the genomics revolution. It has an expense  ratio of 75 basis points (bps) (read: Top ETF Stories of 1H & Investing Ideas for 2H).

iShares Genomics Immunology and Healthcare ETF IDNA — up 31% year to date

The fund seeks to track the investment results of an index composed of developed and emerging market companies that could benefit from long-term growth and innovation in genomics, immunology and bioengineering. It has an expense  ratio of 47 bps (read: Invest in the Future With Megatrend ETFs).

ProShares Ultra Nasdaq Biotechnology ETF BIB — up 21.6% year to date

The fund seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Nasdaq Biotechnology Index. It has an expense ratio of 95 bps (read: 4 Best-Performing Leveraged ETF Areas of Last Week).

SPDR S&P Biotech ETF XBI — up 20.8% year to date

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Biotechnology Select Industry Index. It has an expense ratio of 35 bps (read: ETF Areas for July as Second Wave of Coronavirus Hits Hard).

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ProShares Ultra Nasdaq Biotechnology (BIB): ETF Research Reports
 
SPDR SP Biotech ETF (XBI): ETF Research Reports
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
iShares Genomics Immunology and Healthcare ETF (IDNA): ETF Research Reports
 
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