ETF Trends
ETF Trends

In recent years, there have been many bad times in which to be long biotechnology stocks and exchange traded funds, but with some marquee industry conferences imminent, the biotech industry is in the midst of one of its most potent seasonal periods.

December is the second-best month of the year for the broader biotech sector after July, but due to the arrival of multiple industry conferences this month, January is often kind to biotech stocks as well. Over the past 20, years the biotech sector has posted an average January gain of 3.1%, rising in 65% of those Januarys, according to EquityClock.com.

In January 2014, the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB) the largest biotech ETF, surged 8.3%. Investors are already preparing for a big January from biotech ETFs as highlighted by the more than $485 million of inflows to IBB over the past month. [Tis the Season for Biotech ETFs]

Along with established veterans, some new biotech ETFs could benefit from the arrival of the industry’s conference season.

“Heading into the week of January 12 and the 33rd annual J.P. Morgan Healthcare Conference in San Francisco, investors often ask how the biotechnology sector performs into the conference and throughout the month,” said BioShares in a research note out Monday.

BioShares is the issuer behind the newly minted BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC) and the BioShares Biotechnology Products Fund (NasdaqGM: BBP), which debuted last month. [Two Unique Biotech ETFs Debut]

BioShares analyzed the performance of three major biotech indexes from January 2005 to January 2014, breaking the analysis out to two time frames – December 31 through the first day of the J.P. Morgan conference and the entire month of January.

The issuer notes that the Nasdaq Biotechnology Index, IBB’s underlying index, beat the S&P 500 in eight of those 10 Januarys, “averaging 1.76% of outperformance on average for early January and 3.35% for January. 2005 and 2010 were the only 2 years of underperformance,” according to BioShares.

The benchmarks for BBC and BBP also offered impressive out-performance. The BioShares Biotechnology Clinical Trials Index, BBC’s underlying index, outperformed IBB in six out of 10 Januarys in the early part of month while also outperforming the big biotech ETF for the entire month on six of 10 occasions.

The BioShares Biotechnology Products Index, the benchmark for BBP, is tilted more toward large-caps than BBC’s index, but still managed modest out-performance of IBB during the aforementioned time frames, according to BioShares data.

BBP’s top 10 holdings include Raptor Pharmaceuticals (NasdaqGS: RPTP), Halozyme Therapeutics (NasdaqGS: HALO) and Exelixis (NasdaqGS: EXEL). No stock accounts for more than 3.4% of the ETF’s weight.

BBC’s top 10 holdings include Auspex Pharmaceuticals (NasdaqGS: ASPX), Idera Pharmaceuticals (NasdaqGS: IDRA) and Tetraphase Pharmaceuticals (NasdaqGS: TTPH). No stock receives a weight of more than 2.84% in BBC.

BBC Top 10 Holdings

Table Courtesy: BioShares