ETF provider Source saw its biotech ETF almost double in size the day after the US presidential election as investors returned to the sector.
There was $170 million of inflows into the Source NASDAQ Biotech UCITS ETF on 9 November, taking assets under management to $370 million.
Chris Mellor, executive director, equities product management at Source, said: “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 virtual doubling in size of our biotech product and on-exchange spreads remaining tight at around 0.20% demonstrated that this is a high capacity, high performance product.”
Source said active biotech managers have systematically underperformed the benchmark. Over the last five years the top three active products trailed the NASDAQ Biotech Index by an average of 3.6% per annum.1 The Source NASDAQ Biotech UCITS ETF performs consistently in line with the index less an ongoing charge of 0.40%.
1Data: Bloomberg as of 10 November 2016.