Expect More Election Year Volatility For Biotech ETFs

Biotechnology ETFs should also prove immune to hawkish changes in Fed policy. A recent study by Deutsche Bank indicates major biotech indexes have negative correlations to changes in 20-year U.S. government bonds. Looking ahead, in the years through 2024, spending growth is projected to average 5.8% and peak at 6.3% in 2020.

Related: Technical Tests for Biotech ETFs

“Generalists don’t have conviction on political rhetoric changing anytime soon and it’s not obvious or clear that either Presidential candidate would be necessarily “good” for biotech (which means still some uncertainty); (3) We are still somewhat in a risk-off environment, so we don’t expect big inflows until Street changes its perception of risk and it’s proven otherwise,” adds RBC in a note posted by Barron’s.

As MarketWatch points out, it is not just Clinton and Trump that are weighing on biotechnology and pharmaceuticals stocks. Several states have ballot measures to be voted on in November that seek to cap drug prices while some governors and attorneys general are pushing drug companies to explain big price increases.

For more news on Biotech ETFs, visit our Biotech category.

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