Noticeable performance for Healthcare and Biotech ETFs

‘Tomorrow's Treatments’ and ‘BioTech and Genomics’ were amongst the top performing themes last week following M&A talks and positive industry developments. ‘Net Zero 2050’ remained the most appealing theme for investors pulling in USD$333 million. 

Healthcare and Biotech ETFs back in the spotlight 

Themes investing in the field of life sciences trended upward, proving to be appealing among global investors. ‘Tomorrow's Treatments’ was the top performing theme during the first week of August, averaging 8.9%. The Virtus LifeSci Biotech Products ETF (BBP) surged 16.85%, while the ALPS Medical Breakthroughs ETF (SBIO) rose 14.55%. The rally was mostly driven by claims that Global Blood Therapeutics (GBT) is positioned for a takeover, with some reports suggesting that Pfizer Inc (PFE) is looking into acquiring the company. GBT almost doubled, jumping from USD$32.40 on August 1st to reach USD$63.84 on August 5th, posting 97.03% gains for that time period. The company develops drugs focusing on sickle cell diseases and makes up 3.87% of BBP and 2.11% of SBIO.  The potential deal for PFE is seen as a way for the acquirer to expand its drug portfolio with long-term treatments in a similar fashion to its recently developed COVID-19 vaccine. 

On another front, ‘BioTech and Genomics’ moved to become the second top performer in the thematic universe. Exchange-traded funds adopting this theme averaged 7.14% as some healthcare tech stocks experienced a strengthening in price. For example, the ARK Genomic Revolution ETF (ARKG), the Emerge ARK Genomics & Biotech ETF USD (EAGB.U) and CAD (EAGB), the Global X Genomics & Biotechnology ETF (GNOM), and the iShares Genomics Immunology and Healthcare Index ETF (XDNA), jumped 10.34%, 10.14%, 9.94%, 9.63%, and 7.02% respectively. The gains were mostly driven by overlapping stocks that were trading in the green. Most notably, Beam Therapeutics Inc (BEAM) rose 7.80% over the week to reach USD$63.63 while Fate Therapeutics Inc (FATE) surged almost 11.25% – from USD$30.04 to USD$33.42 – over the same period. Together, these two stocks represent 8.85% of ARK Genomic Revolution ETF’s total portfolio, 9.1% of Emerge ARK Genomics & Biotech ETFs, and 9.73% of iShares Genomics Immunology and Healthcare Index ETF’s. Meanwhile, BEAM is the top holding in the Global X Genomics & Biotechnology ETF constituting 5.27% of its total portfolio. 

ETFs in play:

• Tomorrow's Treatments ETFs
• BioTech and Genomics ETFs

Capital flows overview

‘Net Zero 2050’ maintained its position as the most popular investment strategy in the thematic strategy, pulling in USD$333 million of net inflows spread across 97 ETFs compared with the previous week’s USD$311 million of inflows. Inflows into the theme were mostly propelled by a cash influx into the Lyxor MSCI USA ESG Broad CTB (DR) UCITS ETF (LYUSA) which netted most of the inflows with USD$291 million. Similarly, global investors poured USD$395 million worth of investments into the Sygnia Itrix 4th IR Global Equity ETF (ZAE000252433) pushing ‘Disruptive Technology’ to become the second most appealing theme to investors globally. 

ETFs in play:

• Disruptive Technology ETFs
• Net Zero 2050 ETFs

Data for this article is as of August 05th, 2022.