“Pharma stocks are unlikely to repeat the record of the dot.com era where stocks shed huge amounts over multi-year periods, sometimes on the road to bankruptcy. For the most part, we are not worried about that. However, we expect the stock prices of drug companies to settle in new, lower trading ranges,” notes Seeking Alpha.

The impact of a Trump presidency on healthcare stocks remains to be seen. Candidate Trump rebuked Obamacare and if successful in that effort, there would likely be some effect on diversified healthcare ETFs due to their exposure to health insurance providers.

There are other catalysts to consider, including that the U.S. economy moving into the late-cycle phase, overall growth may slow and signs of an economic slowdown could pop up. Consequently, investors may also turn to defensive sectors that are less economically sensitive, such as health care. Still, political risk looms.

For more information on the biotech sector, visit our biotechnology category.

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