Biotech Outperformance - Can't Take What's Already Earned

2025-05-09 05:37:08 ET

Summary

• The Biotech industry has underperformed due to Trump administration, RFK Jr's skepticism, and funding uncertainty, with major ETFs down 19-25% over six months.
• Some biotech companies with approved products and successful rollouts have outperformed, highlighting the importance of operational momentum.
• Diversification, especially including international holdings, is crucial for biotech investors to optimize portfolio performance amid market shifts.
• Despite broader industry weakness, quality holdings with strong operations and potential for profit generation offer investment opportunities.

Quick Thoughts on the Current Biotech Industry Performance

Due to the rise of the Trump administration, and RFK Jr in particular, biotechnology has been a weak performer right after a few year period of underperformance as interest rates were raised. Over the past six months, the iShares Biotechnology ETF ( IBB ) is down 19%. XBI, the SPDR S&P Biotech ETF ( XBI ), is even down 25%. The trend is also broad, as we can even see specialty funds are weak such as the ARK Genomic Revolution ETF ( ARKG ), Fidelity Select Biotechnology Portfolio ( FBIOX ), Invesco Biotechnology & Genome ETF ( PBE ), iShares Genomics Immunology and Healthcare ETF ( IDNA ), ALPS Medical Breakthroughs ETF ( SBIO ), and Tema Oncology ETF ( CANC ). In the image below, all funds have underperformed the S&P 500 over the past six months, basically since the election results were in....

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