Looking to add some diversification and upside to your equities allocation? While the broader tech space has largely relied on just a handful of names, smaller subcategories in innovative tech also have a role to play. Biotech, for example, in underrated tech ETF SBIO could prove an intriguing option as a rate cut looms.
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The ALPS Medical Breakthroughs ETF (SBIO) charges a 50 basis point fee for its approach. The fund tracks the S-Network Medical Breakthroughs Index, a market-cap-weighted index. That index includes U.S.-listed biotech names with drugs in either phase II or phase III FDA clinical trials.
An Underrated Tech ETF in 2025
Why might one consider it an underrated tech ETF? Biotech innovation benefits from AI as much as any other sector does — perhaps even more so. AI can boost R&D for discovering new drugs in several ways. From digging into previously unmanageable data sets to running even more models based on that data, AI can significantly boost biotech firms.
At the same time, while an ETF like SBIO benefits from the big tech story of the decade, it’s more than that. The underrated tech ETF also provides exposure to a traditionally more defensive area in the form of healthcare. Markets may rise and fall, but the demand for new drugs stays the same or even grows in an aging world.
Finally, rate cuts this fall could help the underrated tech ETF perform in another way — M&A. Many smaller biotech names see a lot of acquisitions given the longer time frame for revenue from their drugs. Cheaper borrowing costs could make more deals happen, boosting the ETF’s performance.
SBIO has spiked in recent weeks. It returned 19.9% over the last three months, according to ETF Database data. That outperformed its ETF Database Category and FactSet Segment averages. It’s also outperformed those averages over the last month. This ETF could be one to watch as fall draws near.
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VettaFi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for SBIO, for which it receives an index licensing fee. However, SBIO is not issued, sponsored, endorsed, or sold by VettaFi. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SBIO.
