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Healthcare Emerges as Best Sector of Last Week: 5 Top ETFs
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Wall Street was downbeat last week with all notable U.S. indexes, with the S&P 500 (down 1.94%), the Dow Jones (down 1.68%), the Nasdaq Composite (down 2.95%), and the Russell 2000 (down 1.71%), recording a slump. Rising inflation, a hawkish Fed and the fast-spreading Omicron variant of COVID-19 led to this bloodbath. Still, Healthcare sector emerged as a key winner last week.
President Joe Biden warned on Dec 16 that the Omicron variant of the coronavirus will spread much more rapidly in the United States. The COVID-19 infection rate has doubled in New York City as Omicron cases are surging ahead of Christmas and New year holidays.
Apart from Omicron, the safe-haven nature of the healthcare sector made it a winner last week. This is because of the fact that the current investing backdrop is saddled with uncertainties. Wholesale prices in the United States gained 9.6% in November from a year ago, marking the highest level since November 2010. The pace beat economists’ estimate of 9.2%.
No wonder, the Fed has paced up QE tapering to contain sky-high inflation. Fed Chairman Jerome Powell said in his post FOMC statement that the central bank will raise the tapering of the monthly bond-buy program. The central bank plans to buy $60 billion per month of bonds in combined Treasuries and agency mortgage-backed securities starting in January, down from $90 billion in December and $120 billion from the start of the pandemic through November.
The meeting projections revealed that 12 out of 18 FOMC members expect at least three rate increases next year. This marks an increase from September’s forecast, where half of the Fed members see at least one hike in 2022. This sparked rising-rate worries in the United States amid Omicron fears. So, investors flocked to sectors like healthcare that is not cyclical in nature. The demand for such sectors remains steady even in an economic slowdown.
U.S. healthcare spending jumped about 10% last year to more than $4 trillion in 2020 as the federal government invested billions of dollars in assisting hospitals, states and medical providers with the pandemic, according to a new government report, marking a big leap from 2019 when the U.S. market saw a 4.3% jump, as quoted on Wall Street Journal article.
All these facts led to a rally in healthcare stocks and ETFs last week. Below are the key winners.
ETFs in Focus
Bioshares Biotech Products (BBP - Free Report) – Up 7.9% Last Week
The underlying LifeSci Biotechnology Products Index is an equal-weighted index that is designed to measure the equity market performance of the common stock of U.S. exchange-listed biotechnology companies with a primary product offering or product candidate that has received the U.S. Food and Drug Administration approval. The expense ratio of BBP is 0.79%.
Etfmg Treatments Testing and Advancements ETF (GERM - Free Report) – Up 7.2%
The underlying Prime Treatments, Testing and Advancements Index provides investors with a reference measure that enables them to track both event-driven news and long-term trends of companies engaged in developing treatments and vaccines, or diagnostic technology, in the fight against infectious diseases. The expense ratio of BBP is 0.68%.
Biotechnology Index NYSE ETF (FBT - Free Report) – Up 6.2%
The underlying NYSE Arca Biotechnology Index is an equal-dollar weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. The expense ratio of BBP is 0.55%.
Alps Medical Breakthroughs ETF (SBIO - Free Report) – Up 6.1%
The underlying S-Network Medical Breakthroughs Index captures research & development opportunities in the pharmaceutical industry. It consists of small-cap and mid-cap pharmaceutical and biotechnology stocks listed on U.S. stock exchanges that have one or more drugs in either Phase II or Phase III US FDA clinical trials. The expense ratio of SBIO is 0.50%.
The underlying Dynamic Biotech & Genome Intellidex Index seeks to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value. The expense ratio of PBE is 0.59%.
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Healthcare Emerges as Best Sector of Last Week: 5 Top ETFs
Wall Street was downbeat last week with all notable U.S. indexes, with the S&P 500 (down 1.94%), the Dow Jones (down 1.68%), the Nasdaq Composite (down 2.95%), and the Russell 2000 (down 1.71%), recording a slump. Rising inflation, a hawkish Fed and the fast-spreading Omicron variant of COVID-19 led to this bloodbath. Still, Healthcare sector emerged as a key winner last week.
President Joe Biden warned on Dec 16 that the Omicron variant of the coronavirus will spread much more rapidly in the United States. The COVID-19 infection rate has doubled in New York City as Omicron cases are surging ahead of Christmas and New year holidays.
Apart from Omicron, the safe-haven nature of the healthcare sector made it a winner last week. This is because of the fact that the current investing backdrop is saddled with uncertainties. Wholesale prices in the United States gained 9.6% in November from a year ago, marking the highest level since November 2010. The pace beat economists’ estimate of 9.2%.
No wonder, the Fed has paced up QE tapering to contain sky-high inflation. Fed Chairman Jerome Powell said in his post FOMC statement that the central bank will raise the tapering of the monthly bond-buy program. The central bank plans to buy $60 billion per month of bonds in combined Treasuries and agency mortgage-backed securities starting in January, down from $90 billion in December and $120 billion from the start of the pandemic through November.
The meeting projections revealed that 12 out of 18 FOMC members expect at least three rate increases next year. This marks an increase from September’s forecast, where half of the Fed members see at least one hike in 2022. This sparked rising-rate worries in the United States amid Omicron fears. So, investors flocked to sectors like healthcare that is not cyclical in nature. The demand for such sectors remains steady even in an economic slowdown.
U.S. healthcare spending jumped about 10% last year to more than $4 trillion in 2020 as the federal government invested billions of dollars in assisting hospitals, states and medical providers with the pandemic, according to a new government report, marking a big leap from 2019 when the U.S. market saw a 4.3% jump, as quoted on Wall Street Journal article.
All these facts led to a rally in healthcare stocks and ETFs last week. Below are the key winners.
ETFs in Focus
Bioshares Biotech Products (BBP - Free Report) – Up 7.9% Last Week
The underlying LifeSci Biotechnology Products Index is an equal-weighted index that is designed to measure the equity market performance of the common stock of U.S. exchange-listed biotechnology companies with a primary product offering or product candidate that has received the U.S. Food and Drug Administration approval. The expense ratio of BBP is 0.79%.
Etfmg Treatments Testing and Advancements ETF (GERM - Free Report) – Up 7.2%
The underlying Prime Treatments, Testing and Advancements Index provides investors with a reference measure that enables them to track both event-driven news and long-term trends of companies engaged in developing treatments and vaccines, or diagnostic technology, in the fight against infectious diseases. The expense ratio of BBP is 0.68%.
Biotechnology Index NYSE ETF (FBT - Free Report) – Up 6.2%
The underlying NYSE Arca Biotechnology Index is an equal-dollar weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. The expense ratio of BBP is 0.55%.
Alps Medical Breakthroughs ETF (SBIO - Free Report) – Up 6.1%
The underlying S-Network Medical Breakthroughs Index captures research & development opportunities in the pharmaceutical industry. It consists of small-cap and mid-cap pharmaceutical and biotechnology stocks listed on U.S. stock exchanges that have one or more drugs in either Phase II or Phase III US FDA clinical trials. The expense ratio of SBIO is 0.50%.
Dynamic Biotechnology & Genome Invesco ETF (PBE - Free Report) – Up 5.8%
The underlying Dynamic Biotech & Genome Intellidex Index seeks to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value. The expense ratio of PBE is 0.59%.