LABU seeks daily investment results that are equal to 300% of the daily performance of the S&P Biotechnology Select Industry Index with the majority of its allocations going towards securities of the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. Furthermore, the index is designed to measure the performance of the biotechnology sub-industry based on the Global Industry Classification Standards.
Tax Breaks Fueled Industry in 2018
Per a blog post from Direxion Investments, one of the main drivers in 2018 driving the biotech and pharmaceutical industry was a lower corporate tax rate. As such, these corporate tax breaks helped spur the number of mergers and acquisitions in biopharma.
According to Direxion Investments, “the primary catalyst behind this spending spree is the windfall many of these companies gained from the new U.S. tax structure that lowered corporate tax rate from 35 to 21 percent while also permitting companies to repatriate revenue stockpiled offshore at the lower rate. This is enormously beneficial to pharmaceutical companies, who tend to hoard offshore profits. The last time companies experienced such a tax holiday in 2004, Pfizer Inc. repatriated $37 billion for dividend and stock buyback programs.”
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