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Biotech ETF SBIO Can Get Its Groove Back

BY | ETF Database
6:03 am ET 09/29/26 | 3 VIEWS
With rising Treasury yields and the Federal Reserve’s recent interest rate hike ranking as the likely culprits, the previously hot ALPS Medical Breakthroughs ETF (SBIO B-) is in the midst of a correction. That pullback, though, may be a buying opportunity.Despite the recent rough patch, SBIO is still up about 14% year-to-date. A case can be made that investors are overreacting to the impact of higher rates on biotech stocks. Yes, biotech companies, particularly the mid- and small-cap names lining the SBIO roster, often need to raise capital. On that note, it’s worth remembering that SBIO components are required to hold enough cash to survive at least two years at current burn rates. Beyond potential overreaction to Fed hawkishness, there are other, arguably more compelling reasons to consider SBIO. Those factors include big pharma’s desire to access innovation and the industry’s need to fortify its product pipelines. “Large pharmaceutical companies are also paying attention,” reported Lauren Rublin for Barron’s. “They have been striking licensing deals with smaller biotechs and scooping up whole companies in a bid to rebuild their pipelines and replace blockbuster drugs facing patent expirations.”Innovation MattersInnovation is the lifeblood of the biotechnology industry. On that front, however, not all ETFs are created equal. Said another way, some biotech funds that tilt heavily toward older large-cap companies may be less volatile. They don’t provide the access to innovation that SBIO does, though. In fact, that’s been one of the ETF’s calling cards over its nearly 12 years on the market. That trait is as important as ever, because biotech innovation is a competition with global implications. “It is critical that the U.S. accelerates innovation in medical science. Trying to block China’s innovation isn’t going to succeed for many reasons,” David Risinger of Leerink Partners told Barron’s. “There is a risk that China entities would simply partner with non-U.S. entities to advance their innovation. I hope that leaders in Washington understand the urgent need to support U.S. biopharma innovation in a constructive manner, rather than trying to counter it in a manner that may be ineffective and accelerate innovation in China.” Another perk offered by SBIO: Its holdings must have at least one drug or therapy in Phase II or III clinical trials. That means that some of the fund’s components could move due to positive clinical trial data. As just one example of that possibility, SBIO member firm Rapport Therapeutics (RAPP) could deliver Phase II top-line results on its RAP-219 bipolar mania treatment as soon as next month. Good news on that front would likely boost the stock while potentially providing some help to SBIO along the way. For more news, information, and analysis, visit the ETF Building Blocks Content Hub. VettaFi LLC (“VettaFi”) is the index provider for SBIO, for which it receives an index licensing fee. However, SBIO is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SBIO.

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