Keep an eye on the red-hot, recession proof biotech space.
There’s been a good deal of M&A activity – and it’s far from over. In fact, in the first quarter, M&A activity soared to about $71 billion, more than double year over year numbers. That included Pfizer’s acquisition of Seagen. Most recently, Merck said it would acquire Prometheus Biosciences for about $11 billion.
We’ll see even more moving forward. All because major companies need to refresh their pipelines, especially with patent expirations.
That being said, we could see a firestorm of bullish activity in the sector.
And while you can always guesstimate which companies could be acquired next, ETFs are also a great way to gain exposure to the potential boom.
Three of the same biotech-related ETFs include:
SPDR S&P Biotech ETF (XBI)
One of the best ways to diversify at less cost is with a biotech ETF, such as the SPDR S&P Biotech ETF (XBI). With an expense ratio of 0.35%, the ETF offers exposure to the S&P Biotechnology Select Industry Index. Some of its top holdings include Biogen, Veracyte, Moderna, Gilead Sciences, Amgen, and VIr Biotechnology to name a few. The ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Biotechnology Select Industry Index.
ProShares Ultra NASDAQ Biotechnology (BIB)
With an expense ratio of 0.95%, the BIB ETF seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Nasdaq Biotechnology Index. Some of its top holdings include Compass Pathways, Cara Therapeutics, Inovio Pharmaceuticals, C4 Therapeutics, Achillion Pharmaceuticals, and dozens more.
iShares Biotechnology ETF (IBB)
With an expense ratio of 0.44%, the IBB ETF tracks the investment results of an index composed of U.S.-listed equities in the biotechnology sector. Some of its top holdings include Gilead, Amgen, Moderna, Biogen, Seagen, Illumina, and dozens more.