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ETFs That You May Consider Amid a Strengthening Biotech Outlook
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Key Takeaways
The S&P Biotechnology Select Industry Index has gained 27% YTD and 40% over the past year.
Drug innovation, FDA approvals, AI and M&A activity are strengthening the biotech sector's outlook.
IBB, XBI, FBT, BBH and BBP offer different ways to gain exposure to biotechnology stocks.
Markets have been highly volatile this year and persistent uncertainties are likely to keep investors on edge. However, the biotechnology sector is emerging as a bright spot, supported by renewed momentum and promising growth prospects.
According to analysts, as quoted on CNBC, a new biotech cycle is taking shape, driven by promising clinical trial results, M&A activity and advances in technologies such as genomics, mRNA and artificial intelligence. The sector is attracting investor attention amid promising technological breakthroughs and continued drug approvals.
With biotech stocks gaining ground, the sector appears well-positioned for further gains, making it worth watching for investors seeking growth opportunities. The S&P Biotechnology Select Industry Index highlights the sector’s strong performance, gaining approximately 27.2% year to date and 40% over the past year. The index has significantly outperformed the broader S&P 500, which has advanced about 12.8% year to date and 12.3% over the past year.
Despite these strong gains, the biotech index has declined approximately 1.85% so far in October. This pullback could offer investors a chance to gain exposure to the sector amid its promising growth outlook.
FDA Approvals and AI Could Drive Biotech's Next Wave
AI is reshaping the biotechnology industry by improving efficiency across research and development. Companies are using the technology to streamline clinical trials, enhance diagnostic accuracy and optimize biomanufacturing processes, boosting operational efficiency. AI could also help biotech companies advance drug development and potentially bring new treatments to the market faster.
Per the CNBC article, approximately 66 novel drugs are awaiting potential FDA approval, including promising candidates such as Moderna and Merck’s melanoma treatment and Eli Lilly’s next-generation obesity drug. AI could help increase drug approvals over time by enabling companies to accelerate drug development and improve research efficiency.
Additionally, a promising pipeline of experimental therapies is adding to the biotech sector's appeal.
Biotech M&A Gains Momentum
M&A activity could provide another boost to the biotech sector. As per Jeet Mukherjee, biotech analyst at BTIG, biopharma dealmaking reached $134 billion in the first half of 2026, surpassing the $112 billion recorded for all of 2025, as quoted on the abovementioned CNBC article.
However, higher interest rates could weigh on biotech M&A activity by increasing financing costs. Despite this risk, analysts suggest that the sector's outlook has improved, as per the CNBC article. While the optimism is reflected in strong stock performance and higher valuations, continued innovation and promising drug pipelines could offer further investment opportunities.
ETFs to Watch as Biotech Momentum Builds
According to Towards Healthcare, the U.S. biotechnology market is projected to witness a CAGR of 12.42% from 2025 to 2034, reaching $2 trillion by 2034, up from $699.02 billion in 2025.
Investing in the biotech sector through ETFs can be an attractive opportunity for investors looking to capitalize on its rebound. These funds offer diversified exposure to the sector's rebound. Below, we highlight a few biotech ETFs for investors to consider.
iShares Biotechnology ETF seeks to track the performance of ICE Biotechnology Index with a basket of 243 securities. The fund has gathered an asset base of $10.83 billion and charges an annual fee of 0.44%.
iShares Biotechnology ETF has a one-month average trading volume of about 1.68 million shares. IBB has gained 25.7% year to date and 35.2% over the past year. Over the past three months, the fund has gained 12.6%.
State Street SPDR S&P Biotech ETF seeks to track the performance of S&P Biotechnology Select Industry Index with a basket of 165 securities. The fund has gathered an asset base of $10.5 billion and charges an annual fee of 0.35%.
State Street SPDR S&P Biotech ETF has a one-month average trading volume of about 10.12 million shares. XBI has gained 27% year to date and 39.5% over the past year. Over the past three months, the fund has gained 4.7%.
First Trust NYSE Arca Biotechnology ETF (FBT - Free Report)
First Trust NYSE Arca Biotechnology ETF seeks to track the performance of NYSE Arca Biotechnology Index with a basket of 30 securities. The fund has gathered an asset base of $3.01 billion and charges an annual fee of 0.55%. The underlying index is an equal-dollar-weighted index.
First Trust NYSE Arca Biotechnology ETF has a one-month average trading volume of about 92,000 shares. FBT has gained 32.5% year to date and 45.2% over the past year. Over the past three months, the fund has gained 9.3%.
VanEck Biotech ETF seeks to track the performance of MVIS US Listed Biotech 25 Index with a basket of 26 securities. The fund has gathered an asset base of $505.8 million and charges an annual fee of 0.35%.
VanEck Biotech ETF has a one-month average trading volume of about 12,000 shares. BBH has gained 32% year to date and 41.3% over the past year. Over the past three months, the fund has gained 19.7%.
Virtus Biotech ETF seeks to track the performance of LifeSci Biotechnology Products Index with a basket of 66 securities. The fund has gathered an asset base of $129.9 million and charges an annual fee of 0.34%.
Virtus Biotech ETF has a one-month average trading volume of about 16,000 shares. BBP has gained 31.3% year to date and 43.2% over the past year. Over the past three months, the fund has gained 8.5%.
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ETFs That You May Consider Amid a Strengthening Biotech Outlook
Key Takeaways
Markets have been highly volatile this year and persistent uncertainties are likely to keep investors on edge. However, the biotechnology sector is emerging as a bright spot, supported by renewed momentum and promising growth prospects.
According to analysts, as quoted on CNBC, a new biotech cycle is taking shape, driven by promising clinical trial results, M&A activity and advances in technologies such as genomics, mRNA and artificial intelligence. The sector is attracting investor attention amid promising technological breakthroughs and continued drug approvals.
With biotech stocks gaining ground, the sector appears well-positioned for further gains, making it worth watching for investors seeking growth opportunities. The S&P Biotechnology Select Industry Index highlights the sector’s strong performance, gaining approximately 27.2% year to date and 40% over the past year. The index has significantly outperformed the broader S&P 500, which has advanced about 12.8% year to date and 12.3% over the past year.
Despite these strong gains, the biotech index has declined approximately 1.85% so far in October. This pullback could offer investors a chance to gain exposure to the sector amid its promising growth outlook.
FDA Approvals and AI Could Drive Biotech's Next Wave
AI is reshaping the biotechnology industry by improving efficiency across research and development. Companies are using the technology to streamline clinical trials, enhance diagnostic accuracy and optimize biomanufacturing processes, boosting operational efficiency. AI could also help biotech companies advance drug development and potentially bring new treatments to the market faster.
Per the CNBC article, approximately 66 novel drugs are awaiting potential FDA approval, including promising candidates such as Moderna and Merck’s melanoma treatment and Eli Lilly’s next-generation obesity drug. AI could help increase drug approvals over time by enabling companies to accelerate drug development and improve research efficiency.
Additionally, a promising pipeline of experimental therapies is adding to the biotech sector's appeal.
Biotech M&A Gains Momentum
M&A activity could provide another boost to the biotech sector. As per Jeet Mukherjee, biotech analyst at BTIG, biopharma dealmaking reached $134 billion in the first half of 2026, surpassing the $112 billion recorded for all of 2025, as quoted on the abovementioned CNBC article.
However, higher interest rates could weigh on biotech M&A activity by increasing financing costs. Despite this risk, analysts suggest that the sector's outlook has improved, as per the CNBC article. While the optimism is reflected in strong stock performance and higher valuations, continued innovation and promising drug pipelines could offer further investment opportunities.
ETFs to Watch as Biotech Momentum Builds
According to Towards Healthcare, the U.S. biotechnology market is projected to witness a CAGR of 12.42% from 2025 to 2034, reaching $2 trillion by 2034, up from $699.02 billion in 2025.
Investing in the biotech sector through ETFs can be an attractive opportunity for investors looking to capitalize on its rebound. These funds offer diversified exposure to the sector's rebound. Below, we highlight a few biotech ETFs for investors to consider.
iShares Biotechnology ETF (IBB - Free Report)
iShares Biotechnology ETF seeks to track the performance of ICE Biotechnology Index with a basket of 243 securities. The fund has gathered an asset base of $10.83 billion and charges an annual fee of 0.44%.
iShares Biotechnology ETF has a one-month average trading volume of about 1.68 million shares. IBB has gained 25.7% year to date and 35.2% over the past year. Over the past three months, the fund has gained 12.6%.
State Street SPDR S&P Biotech ETF (XBI - Free Report)
State Street SPDR S&P Biotech ETF seeks to track the performance of S&P Biotechnology Select Industry Index with a basket of 165 securities. The fund has gathered an asset base of $10.5 billion and charges an annual fee of 0.35%.
State Street SPDR S&P Biotech ETF has a one-month average trading volume of about 10.12 million shares. XBI has gained 27% year to date and 39.5% over the past year. Over the past three months, the fund has gained 4.7%.
First Trust NYSE Arca Biotechnology ETF (FBT - Free Report)
First Trust NYSE Arca Biotechnology ETF seeks to track the performance of NYSE Arca Biotechnology Index with a basket of 30 securities. The fund has gathered an asset base of $3.01 billion and charges an annual fee of 0.55%. The underlying index is an equal-dollar-weighted index.
First Trust NYSE Arca Biotechnology ETF has a one-month average trading volume of about 92,000 shares. FBT has gained 32.5% year to date and 45.2% over the past year. Over the past three months, the fund has gained 9.3%.
VanEck Biotech ETF (BBH - Free Report)
VanEck Biotech ETF seeks to track the performance of MVIS US Listed Biotech 25 Index with a basket of 26 securities. The fund has gathered an asset base of $505.8 million and charges an annual fee of 0.35%.
VanEck Biotech ETF has a one-month average trading volume of about 12,000 shares. BBH has gained 32% year to date and 41.3% over the past year. Over the past three months, the fund has gained 19.7%.
Virtus Biotech ETF (BBP - Free Report)
Virtus Biotech ETF seeks to track the performance of LifeSci Biotechnology Products Index with a basket of 66 securities. The fund has gathered an asset base of $129.9 million and charges an annual fee of 0.34%.
Virtus Biotech ETF has a one-month average trading volume of about 16,000 shares. BBP has gained 31.3% year to date and 43.2% over the past year. Over the past three months, the fund has gained 8.5%.