Two biotech ETFs to watch for the rest of 2022 and beyond

The uniqueness of the biotech industry

The biotech industry is an anomaly compared to its peers. Unlike other sectors, it is highly regulated as companies have to go through stringent measures before they can have their products and services commercialized. The process of successfully bringing an invention to market through clinical trials can take many years and is often expensive given the high associated costs. Additionally, the success rate of clinical trials is often low given the complexities of molecular biology that scientists face. However, for risk-tolerant investors who can afford to ride out the volatility of the biotech industry, there can be opportunities to make solid returns.  Let’s take a closer look at two ETFs that offer exposure to this growing theme.  

SBIO - (ALPS Medical Breakthroughs ETF)

First on the list is SBIO. This ETF seeks to provide exposure to small-and-mid cap biotech companies, with the stipulation that they have one or more drugs in phase 2 or phase 3 in clinical trials. This is an added bonus for investors as it may significantly shorten the duration of time needed for inventions to reach commercialization. The holdings of this fund have been in the spotlight in recent days as Amgen, one of the largest biopharmaceutical companies in the world, acquired Chemocentryx in a $4 billion dollar deal. Other firms in APLS have had their own success with respect to stronger than expected earnings, and positive news related to progress for pipelines treating eye diseases, depression, and sickle cell disease. With more than $123 million in assets under management, a modest 0.5% in MER fees, and a proven track record of selecting promising companies, this ETF could prove an interesting proposition for investors seeking to gain biotech exposure. 

XBI - (SPDR S&P Biotech ETF)

SPDR has enjoyed a nice rally as of late, with shareholders sure to be pleased with the recent 16.35% spike over the last month. This can largely be attributed to Pfizer’s $5.4 billion dollar acquisition of Global Blood Therapeutics, which makes up 2.45% of XBI as its top holding by weight. The fund also holds Chemocentrix which has given it an additional boost too. As one of the largest biotech ETFs in the world with more than $8.6 billion in assets under management and a small MER fee of 0.35%, this is another interesting option for investors seeking exposure to a diverse set of biotech firms targeting medical breakthroughs.

Please note this article is for information purposes only and does not constitute investment advice.