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A Guide to Biotech ETF Investing Amid the Coronavirus Crisis

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The pandemic has triggered a race to introduce vaccine and treatment, thereby opening up new investing opportunities in the biotech sector in the past year. Consequently, this hot space for investments had a good run on the bourses during this period. Notably, the S&P Biotechnology Select Industry Index has appreciated 56% in the past year in comparison to the broader S&P 500’s 16.4% rise.

Sadly, the global health crisis continues to aggravate, as the number of cases has now crossed the grim mark of 90 million. The United States is having a tough time controlling the pandemic, with more than 22 million reported COVID-19 cases. Also, the country’s death toll is near 376,000 since the beginning of the outbreak.

Highlighting the severing condition in the United States, a CNN report states that the country has averaged more than 3,000 coronavirus-related deaths per day in the past week, and has seen more than 200,000 new infections for seven consecutive days.

Meanwhile, the beginning of the inoculation process among people is buoying some optimism. Per the Centers for Disease Control and Prevention (CDC) data, the United States has distributed more than 22 million of COVID-19 vaccines across its length and breadth (as mentioned in the same CNN report). Notably, around 9 million people have been administered their first shot of vaccine.

The Pfizer Inc. (PFE - Free Report) and BioNTech SE BNTX coronavirus vaccine has now been approved for emergency/temporary use in more than 40 countries, including the U.K., Bahrain, Mexico, Singapore, Switzerland and Canada. The Moderna (MRNA - Free Report) coronavirus vaccine has already received authorization in the United States, Canada and Israel. The vaccine candidate is under review in Singapore, Switzerland and the U.K.

Moderna also recently announced that the European Commission has granted conditional marketing authorization (CMA) to its mRNA-based coronavirus vaccine candidate, mRNA-1273. This is the second approval for a COVID-19 vaccine in the European Union, following a CMA to Pfizer/BioNTech’s mRNA-based vaccine BNT162b2, last month.

Going on, Sanofi (SNY), GlaxoSmithKline's (GSK) and Johnson & Johnson (JNJ) are also progressing in the development of coronavirus vaccines and will likely be ready to roll out the same in 2021.

Meanwhile, amid the ongoing health crisis, the discovery of a new COVID-19 strain has worried investors. The new variant, first discovered in England, has resulted in several nations imposing restrictions on travel from the U.K. However, a CNN report states that Pfizer/BioNTech and Moderna are testing their vaccines for efficacy against the new mutated version of the virus (per company statements).

Impressive progress is being observed in the coronavirus treatment and antibodies space as well. The FDA has granted emergency use authorization to Eli Lilly & Company’s (LLY - Free Report) and Incyte’s (INCY) oral JAK inhibitor, Olumiant for use in combination with Gilead’s (GILD) remdesivir in hospitalized COVID-19 patients based on positive phase III results from the ACTT-2 study.

In the meantime, Regeneron’s (REGN) novel investigational antibody "cocktail,” casirivimab and imdevimab, administered together (formerly known as REGN-COV2 or REGEN-COV2) has also been granted EUA by the FDA for the treatment of mild-to-moderate COVID-19 in patients who are at high risk of progressing to severe COVID-19 and/or hospitalization.

Going on, the FDA has also granted EUA to Lilly’s bamlanivimab as a monotherapy for the treatment of recently-diagnosed mild-to-moderate COVID-19 illness at high risk of progressing to severe COVID-19 or hospitalization.

Moreover, increasing mergers and acquisition (M&A) deals, growing AI dominance and favorable regulatory tidings continue to work in favor of the biotech market.

It is worth noting here that AstraZeneca (AZN) and Alexion Pharmaceuticals, Inc. (Alexion) have entered into a definitive agreement for AstraZeneca to acquire Alexion. The acquisition is expected to close in the third quarter of 2021. While Alexion has solid growth prospects on a standalone basis, the combination will give it a chance to further globalize its portfolio. Going on, Gilead’s recent acquisition of oncology company, Immunomedics, for approximately $21 billion attracted investors’ attention.

Here, we have highlighted the nine most popular biotech ETFs for investors seeking to benefit from the strengthening biotechnology market.

iShares Nasdaq Biotechnology ETF (IBB - Free Report)

This fund seeks to provide exposure to U.S. biotechnology and pharmaceutical companies and tracks the Nasdaq Biotechnology Index. It comprises 284 holdings. It has an AUM of $10.77 billion and charges a fee of 46 basis points (bps) a year. The fund trades in an average three-month trading volume of around 3 million shares (read: Wil Nasdaq ETFs Win in 2021 After the Best Year Since 2009?).

SPDR S&P Biotech ETF (XBI - Free Report)

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. It holds about 170 securities in its basket. Its AUM is $7.37 billion and expense ratio, 0.35%. The fund trades in an average three-month trading volume of 4.7 million shares (read: ETF Areas Thriving During Coronavirus Pandemic).

First Trust NYSE Arca Biotechnology ETF (FBT - Free Report)

The fund replicates as closely as possible, before fees and expenses, the price and yield of the NYSE Arca Biotechnology Index. It holds about 31 securities in its basket. Its AUM is $2.14 billion. The fund trades in an average three-month trading volume of around 65,000 shares (read: ETF Market Outlook & Picks for 2021).

ARK Genomic Revolution ETF (ARKG - Free Report)

This is an actively-managed ETF focusing on companies likely to benefit from the extension and enhancement of the quality of human and other life by incorporating technological and scientific developments, plus improvements and advancements in genomics into their business. The fund holds 52 stocks in its basket. It charges 0.75% in expense ratio and has accumulated $8.93 billion in its asset base. The fund trades in an average three-month trading volume of 3.1 million shares (read: Top Performing ETF Areas of 2020).

VanEck Vectors Biotech ETF (BBH - Free Report)

The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. It holds about 24 securities in its basket. Its AUM is $491.2 million and expense ratio is 0.35%. The fund trades in an average three-month trading volume of around 17,000 shares.

Invesco Dynamic Biotechnology & Genome ETF (PBE - Free Report)

This fund follows the Dynamic Biotech & Genome Intellidex Index. The index comprises companies that are majorly engaged in the research, development, manufacturing and marketing plus distribution of various biotechnological products, services and processes and companies that gain significantly from scientific and technological advances in biotechnology and genetic engineering and research. The fund holds 30 stocks in its basket. It has managed $279.7 million in its asset base. Expense ratio is at 0.58%. The fund trades in an average three-month trading volume of around 7,000 shares (read: ETFs to Tap AstraZeneca Mega-Deal to Buy Alexion).

ALPS Medical Breakthroughs ETF (SBIO - Free Report)

The fund seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index, the S-Network Medical Breakthroughs Index. The product charges 50 bps in fees per year from investors and holds 104 stocks in its basket. It has an AUM of $275 million in its asset base. The fund trades in an average three-month trading volume of around 41,000 shares (read: 5 Small-Cap Sector ETFs Beating the Russell 2000).

Principal Healthcare Innovators Index ETF (BTEC - Free Report)

The investment seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq Healthcare Innovators Index. It holds 263 stocks in its basket. BTEC charges 42 bps in annual fees. The product has accumulated $164.2 million in its asset base. The fund trades in average three-months trading volume of around 18,000 shares.

Loncar Cancer Immunotherapy ETF (CNCR - Free Report)

This ETF seeks to track the Loncar Cancer Immunotherapy Index. Holding 32 stocks in its basket, it has an AUM of $50.2 million. The product charges 79 bps in annual fees. The fund trades in an average three-month trading volume of around 9,500 shares.

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