The United States and China have been locking horns when it comes to technological advances. ETF investors looking to capitalize on strength in U.S. biotech should give the VanEck Vectors® Biotech ETF ( BBH B- ) a look.
While the U.S. response to the Covid-19 pandemic has come under fire, the same narrative can’t be applied to biotechnology. “The United States’s overall track record in responding to the pandemic has been awful,” a Lawfare article said. “Yet the success of its vaccine development efforts shows that when it comes to biotechnology, the industry of the future, the U.S. is way ahead of China and most of its other rivals.” BBH seeks to replicate as closely as possible the price and yield performance of the MVIS® US Listed Biotech 25 Index ( MVBBHTR ), which is intended to track the overall performance of companies involved in the development and production, marketing, and sales of drugs based on genetic analysis and diagnostic equipment.
Overall, BBH offers investors exposure to:
- Highly Liquid Companies: The index seeks to track the most liquid companies in the industry based on market cap and trading volume.
- Industry Leaders: The index methodology favors the largest companies in the industry.
- A Global Scope: BBH may include both domestic and U.S. listed foreign companies, allowing for enhanced industry representation.
- Strong Performance: The fund is up almost 30% within the last 12 months.
China has aggressive plans to be more self-sufficient, which is contributing to their efforts to enhance their technology in all sectors. However, they still have a ways to go when it comes to U.S. biotechnology proficiency.
“A continuing refrain from Washington in recent years has been that the United States is falling behind China in the development of critical emerging technologies,” the Lawfare article said. “In some fields, this may be true. But not in biotechnology. To be sure, China’s biotech sector is growing at a torrid pace, and some of its firms are becoming leaders in certain areas, such as cancer treatment. Yet the U.S. retains a dominant position in research, development and commercialization, accounting for almost half of all biotech patents filed from 1999 to 2013.”
“The triumph of its biotechnology industry during the coronavirus pandemic, producing two highly effective vaccines using an entirely new approach based on messenger RNA, and in record time, shows that the U.S.’s competitive edge in biotechnology remains largely intact,” the article added. “And that has important implications as Washington gears up for a sustained period of geopolitical competition with Beijing.”
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