Source reports record flows into biotech ETF

Jun 26th, 2017 | By | Category: Equities

European ETF provider Source has reported that the Source NASDAQ Biotech UCITS ETF (LON: SBIO) has seen more than $300 million of net inflows over the past year with another $30 million added in the past week alone.

Source reports record flows into biotech ETF

The Source NASDAQ Biotech UCITS ETF (LON: SBIO) has seen more than $300 million of net inflows over the past year, with $170m added on 9 November alone.

Strong investor demand combined with recent sector outperformance has seen assets under management in the fund swell to more than $600 million. There has been a big move up in US biotech in recent days with the underlying NASDAQ Biotech Index climbing more than 9% since the start of last week (19th June). This is the biggest one-week return since the US Presidential election result in November 2016, which prompted the biggest one week return in the history of the index.

SBIO almost doubled in size the day after the US presidential election as investors returned to the sector with more than $170 million of inflows into the fund on 9 November 2016 alone.

Source has suggested a number of potential catalysts which have contributed most recently to the sector moving higher. These include positive results in late-stage clinical trials that have lifted biotech stocks that are most exposed to cancer treatments, signs of renewed merger & acquisition activity in the sector, and increased probability of supportive tax changes due to the Republican wins in the recent House elections.

Chris Mellor, executive director, equities product management, Source, said: “The biotech sector has been in particular focus in the wake of the Trump election win. This can be seen in the strong inflows into the sector, as evidenced by Source’s NASDAQ Biotech UCITS ETF which now stands at more than half a billion in assets under management.”

The NASDAQ Biotech Index comprises biotechnology and pharmaceuticals companies (as defined by ICB) listed on the NASDAQ stock exchange.  Stocks are filtered to meet minimum market capitalisation and liquidity requirements. They are then weighted by modified market capitalisation with the largest five constituents capped at 8% and the remaining constituents capped at 4%. The index is rebalanced quarterly and reviewed annually in December.

The top five constituents are Celgene (8.3%), Biogen (8.1%), Amgen (8.0%), Regeneron (7.9%) and Gilead Sciences (7.8%).

SBIO trades in US dollars on the London Stock Exchange and SIX Swiss Exchange and in euros on Euronext Amsterdam. It has a total expense ratio of 0.40%.

Source: Bloomberg.

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