Investors have been flocking back to health care ETFs due in part the resurgence of biotechnology stocks and funds. After swooning earlier this year, biotech ETFs have reclaimed those losses and then some, recently moving to fresh all-time highs. The First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) was August’s best-performing non-leveraged ETF with a gain of 14%. [Biotech ETFs Can Build on August Returns]
“Developed market central banks continue to make the case that the cost of doing too little outweighs the cost of doing too much. Due to the impact of QE, investors have been searching for yield and driving down credit spreads. As such, other than the influence of swings in sentiment and technical factors, there is little reason to believe this will change.
“At this stage in the cycle, we may see investors favoring equities over credit as EPS rises, but so does leverage. With US interest rate forecasts decreasing, the carry trade for emerging markets should continue to help EM markets. Cyclicals also continue to look more favorable than defensives. All in all, the Goldilocks economy seems to taking shape but the three bears could be right around the corner,” added Mazza.
Health Care Select Sector SPDR
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of TLT.