The iShares Nasdaq Biotechnology Index Fund (IBB) is one of two major biotech ETFs trading in the U.S., with the other being the SPDR S&P Biotech ETF (XBI), itself up a nice 19% year-to-date.
Biotechs have been buoyed by a number of major drivers for the past few years, including the market prospects of the aging baby boomers, the expansion of Medicare coverage and the real quick-hit specialist: mergers & acquisitions.
Big Pharma’s biggest names have become increasingly reliant on M&A, not R&D, to fill their pipelines as their patents expire and sales of their best products are gobbled up by generics. The smaller biotechs traditionally held by XBI and IBB are the natural beneficiaries.
This biotech fund has gotten huge boosts this year from the 40%-50% returns from top holdings Celgene (CELG), Gilead Sciences (GILD) and Biogen (BIIB). IBB charges 0.48% in expenses.