In this “Quick Hitter” video, I wanted to highlight a specific ETF that popped up on my daily “review and preview” report: the ALPS Medical Breakthroughs ETF (SBIO), which was a top performer in our thematic channel.
I used this as an opportunity to discuss how I like to use niche ETFs as a research tool to find and track innovative companies that I might otherwise miss.
I explain SBIO’s specific strategy: it tracks biotech companies that have drugs in Phase 2 or Phase 3 of FDA clinical trials. It also applies a filter to ensure these companies have at least 24 months of cash on their balance sheet, accounting for the long and costly approval process.
Using our portfolio visualizer, I show that the ETF holds 99 stocks, primarily in the mid-small cap space. I also note that the fund’s strong performance was driven by broad rallies in the biotech names it holds.
I conclude that ETFs like SBIO are powerful tools. They effectively narrow down the universe of stocks in a complex sector, doing the initial screening work for you. This can help you discover new, innovative companies for your watchlist—whether you invest in the ETF itself or use it to find individual stock ideas.
Have a question you’d like answered in a future Quick Hitter? Drop us a line here and we will try to feature it in a future video!
Disclosures:
This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.
This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.
