3 Trends Driving Biotech ETFs | ETF Trends

Biotechnology exchange traded funds (ETFs) appear to be movin’ on up as trends start to turn in their favor.

Some of the current trends that may drive this sector higher, according to Marc Lichtenfeld for Investment U,  include:

  • Places like China, India and South America could see drug revenue grow as much as 15% per year. Consider that in the United States and Europe, growth rates are closer to 1% to 3%.
  • Emerging markets have an aging population, too, and they’re going to need medicine and procedures to fix illnesses and chronic conditions. [Biotech and ETFs: A Natural Fit.]
  • Biotech companies are pouring capital into emerging market growth and companies. They know this is where the growth is and where the emerging middle class resides.

Although most biotech ETFs are heavy in U.S.-based stocks,  never fear: those companies are going overseas for new business. Whether they’re here or there, biotech funds may benefit if they do well.

First Trust Amex Biotech (NYSEArca: FBT) is one of the best-performing biotech ETFs of late; though it’s down in the last month, its 10.2% gain over the last three months dusts other funds. It also has the fewest holdings of any biotech ETF, with just 22 components.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.