ARKG Leads in 1-Week Returns as Biotech Rebounds | ETF Trends

Biotech funds began their rebound last week as positive trial data and merger and acquisition news revived the sector.

The ARK Genomic Revolution ETF (ARKG) rallied 7.15% over one week, ahead of all other ETFs in the health and biotech equities ETFs category, according to VettaFi. The actively managed fund invests in companies that are focused on and are expected to substantially benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments and advancements in genomics into their business.

ARKG is designed to be concentrated in issuers in any industry or group of industries in the health care sector, including issuers having their principal business activities in the biotechnology industry, according to the fund’s website. The companies held in ARKG may be leaders, enablers, or beneficiaries of technologies including CRISPR, targeted therapeutics, bioinformatics, molecular diagnostics, stem cells, and agricultural biology. 

Top holdings in the fund as of June 29 include Exact Sciences Corp (EXAS, 7.19%), Ionis Pharmaceuticals Inc (IONS, 6.63%), Teladoc Health Inc (TDOC, 5.27%), CRISPR Therapeutics (CRSP, 4.88%), and Signify Health Inc (SGFY, 4.63%). 

The weakness of the biotech sector observed year to date reversed nearly two weeks ago when it was alleged that Merck & Co. Inc. (MRK) was looking to buy one of the oldest immunotherapy companies in the sector, Seagen Inc. (SGEN), resulting in investors bidding up the space.

M&A volumes in the first half of 2022 that were lower than expected have caused uncertainty for biotech investors year-to-date. Recent positive trial data, declining SMID-cap biotech valuations, and improved free cash flows for pharmaceutical giants may act as positive tailwinds for further SMID-cap biotech acquisitions in 2022, according to a recent insight from ALPS. 

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