Defiance Nasdaq Junior Biotechnology ETF (NASDAQ:IBBJ) is the latest addition as Exchange Traded Funds continue to elicit strong demand, given the strong bullish momentum in the equity market. With investments in the equity market edging high amid growing concerns over an extended stock market, the ETF seeks to provide targeted exposure to the biotech space that has been doing exceedingly well amid the disruptions fuelled by COVID-19 pandemic.
Junior Biotech ETF Exposure
Defiance ETFs LLC is the brainchild behind the new ETF, which will track and try to replicate the performance of the NASDAQ Junior Biotechnology Index. Investors investing in the ETF will gain exposure to high growth junior biotech companies with a market cap of below $5 billion.
The unveiling of the Defiance Nasdaq Junior Biotechnology ETF comes at a time when investors, especially the young, are increasingly flocking the stock market in pursuit of investment opportunities. With the tech industry seeming overstretched given the highly elevated valuation levels, the ETF should be able to offer targeted exposure to disruptive themes in the biotech space seeing as an ideal frontier in the equity markets.
Defiance Nasdaq Junior Biotechnology stands to compete for investors eyeball as focus shifts to biotech and healthcare sector as investors look to diversify their holdings from technology holdings. ALPS Medical Breakthroughs ETF (NYSEARCA:SBIO) is another ETF doing exceedingly well while providing investors with exposure to the healthcare sector.
Healthcare Sector ETF
Now may not be the best time to invest in standalone pharmaceutical companies, given that most of them are facing looming patent cliffs, which could take a toll on their sales in the near future. The fact that innovation matters in the pharmaceutical industry, diversifying holdings with ETF exposure is a sure way of minimizing the risks that come with investing in stocks.
ALPS Medical Breakthroughs ETF (SBIO) fits the bill as an ideal ETF play for gaining diversified exposure in the healthcare sector. The ETF tracks the performance of some of the big hitters in the healthcare sector projected to register a 4.7% average sales growth through 2024.
In addition, SBIO should be an ideal pick for investors looking to gain exposure to small and mid-cap companies with more than one drug in phase 11 or Phase III development. Also, some of the companies that the ETFs is tracking are driving pharmaceutical innovations, and many of them are not staring at patent expiration on key drugs
While the focus in the healthcare sector has been on companies spearheading the development of coronavirus vaccine, that is not the case with SBIO ETF. Many of the ETFs components are not relying on coronavirus vaccine to generate long term shareholder value.