This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech ETFs Show Resiliency

Despite recent pullbacks, exchange-traded funds in the biotech sector continue to outperform the market.

The S&P 500 has lost 32% year to date. While the major biotech ETFs have faced resistance, their performance has been nowhere close to that experienced by the broader market indices. So far this year the SPDR Biotech ETF (XBI) and the iShares Nasdaq Biotechnology Fund (IBB) are down only 9.7% and 11.6%, respectively. The Biotech HOLDRS Trust (BBH) is actually up 0.3% year to date.

The relative strength of biotech ETFs has not gone unnoticed by money managers. "We had a buy signal in the spring on biotech," said Jim Porter, portfolio manager of the Aston/New Century Absolute Return ETF Fund (ANENX). "It has substantially outperformed the Russell 3000."

Porter acknowledges that biotech is not in the clear just yet. "The sector has traded sideways since the middle of September," he said. "Venture capital is going to become more and more careful where it invests its money and is going to want larger ownership interests."

A Focused Approach

As of Aug. 31, the SPDR Biotech ETF, or XBI, was one of Porter's top 10 holdings. XBI has $543 million in total assets, which are spread across 22 holdings. Vertex Pharmaceuticals (VRTX), OSI Pharmaceuticals (OSIP) and ImClone Systems (IMCL) are among the top names in the fund's portfolio.

The iShares Nasdaq Biotech Fund, or IBB, presents a fairly balanced attack with 147 holdings. In recent weeks, it has faced adversity similar to that of the market. "We recently turned negative on it," said Philip Yockey, president and chief investment officer of Tactical Analytics, an independent private research company. "Once it broke under $80, they crushed it like a grape. You have to be careful if it doesn't hold above $69."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
TECH $100.85 0.00%
BBH $134.28 0.00%
BIIB $401.71 0.00%
IBB $363.70 0.00%
XBI $233.86 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs