The Principal Healthcare Innovators Index ETF (Nasdaq: BTEC) is proving to be one of the most impressive healthcare ETFs this year and BTEC’s emergence as leader in its category is rooted in sound fundamentals.
BTEC tracks the Nasdaq U.S. Healthcare Innovators Index, which is designed to provide exposure to early-stage small-capitalization healthcare companies. These are primarily biotechnology and life science, which have the potential to create cures for cancer, develop new medical technologies, or spearhead other medical advances.
“Companies providing innovative healthcare equipment and services have experienced breakaway stockmarket performance recently, with further gains expected as healthcare providers increasingly look to capitalize on advances in technology and science to deliver healthcare outcomes more effectively and efficiently amid the ongoing coronavirus pandemic,” reports ETF Strategy.
BTEC Struts Its Stuff
Since the coronavirus outbreak, health care technology has come to the fore with various innovations to combat the virus. This can only help fuel health care technology exchange-traded funds (ETFs) moving forward from preventative medicine to treatment.
BTEC’s telemedicine exposure is rewarding in the coronavirus environment, but it has vast long-term growth potential. However, BTEC has long-ranging utility, meaning its moment isn’t going to end when Covid-19 is vanquished. The ETF’s focus on research and development-intensive companies, something many basic rivals lack, sets it up well for the long-term.
“However, as initial results from Covid-19 drug trials proved indecisive, political pressure on pharmaceutical companies to put patients before profit has grown and hospitals continue to operate below capacity in anticipation of a potential resurgence in cases, thus putting pressure on the sector’s traditional revenue streams such as elective surgeries, the momentum behind sector’s initial rally has petered out with the S&P 500 Health Care Index rising just 0.3% between 27 April and 3 July,” according to ETF Strategy.
However, BTEC’s momentum isn’t waning. It’s up 6.48% over the past month while the S&P 500 Health Care Index is off almost 2% over the same period.
“What makes BTEC unique – and potentially potent – is its index’s high bar for inclusion,” according to Nasdaq. “For starters, the Nasdaq Healthcare Innovators Index only includes companies deemed to be research and development ‘intensive.’ This can help investors avoid slow-moving, old school pharmaceuticals companies that are facing patent cliffs or dealing with weak pipelines.”
For more on multi-factor strategies, visit our Multi-Factor Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.