Source’s biotech ETF sees assets surge after US Presidential election

Nov 10th, 2016 | By | Category: Equities

European exchange-traded fund provider Source has reported that the Source NASDAQ Biotech UCITS ETF (LON: SBIO) nearly doubled in size the day after the US Presidential elections. The fund added $170m of inflows on Wednesday 9 November while strong performance of its underlying constituents also contributed to bringing the ETF’s total assets under management to over $370m.

Source biotech ETF almost doubles after US Presidential election

Chris Mellor, Executive Director, Equities Product Management, at Source.

Pharmaceutical and biotechnology shares soared on Wednesday as Republican Donald Trump’s victory calmed investor fears of tough action on drug pricing and brought investors swarming back to the sector.

Chris Mellor, Executive Director, Equities Product Management, at Source, commented: “Biotech stocks declined 22% between the start of 2016 and the US presidential election, with investors anticipating hostile legislation from another President Clinton.

“Instead, a full Republican sweep sent stock prices soaring – our Source NASDAQ Biotech UCITS ETF returned 9% on November 9th. Biotech companies stand to benefit not just from looser regulation but also from the potential of a tax holiday on cash repatriation, last seen in 2004.”

The underlying Nasdaq Biotech Index tracks the market cap-weighted performance of 180 US-listed companies which are classified as either biotechnology or pharmaceutical according to the Industry Classification Benchmark. The largest constituents are Celgene (9.0%), Biogen (8.4%) Gilead Sciences (7.9%), Regeneron Pharmaceuticals (7.5%) and Amgen (7.1%). These stocks closed up 10.7%, 8.2%, 5.9%, 13.8% and 5.7% respectively on Wednesday’s trading.

The ETF’s total expense ratio is 0.40%.

According to Source, active biotech managers have systematically underperformed their benchmark with the top three active products trailing the Nasdaq Biotech Index by an average of 3.6% per annum over the past three years.

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