Is Principal’s BTEC the Healthcare ETF to Hold Come Election Day?

The Principal Healthcare Innovators Index ETF (BTEC) is among the healthcare exchange traded funds that have encountered some rough sledding of late due to pre-Election Day jitters. However market observers widely expect biotechnology stocks, prominent in BTEC's holdings, to rebound following the election.

BTEC seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq Healthcare Innovators Index.

Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index at the time of purchase. The index uses a quantitative model designed to identify equity securities in the Nasdaq US Benchmark Index (including growth and value stock) that are small and medium capitalization U.S. healthcare companies.

“While the Biden campaign has offered more the more granular detail on how to aims to depress drug pricing, we observe that pharmaceutical industry campaign donations have heavily favored Biden ($5.9 million) over Trump ($1.5 million),” according to Et al BioCapital. “While this may reflect the industry’s expectations around which candidate is likely to win in November, it does not necessarily provide insight into which administration would foster more favorable market conditions for biopharma.”

Betting on BTEC to Bounce Back

BTEC is an appealing post-election idea because of its depth, meaning it's not a dedicated biotechnology or pharmaceuticals ETF.

What makes BTEC appealing is that the Principal fund is poised to thrive even after COVID-19 is put to bed. For example, telemedicine, one of BTEC’s industry exposures, is benefiting from the pandemic, but it’s slated to deliver exponential growth in the years ahead.

BTEC YTD Performance

In addition to biotech allocations, BTEC provides exposure to companies that are well-positioned to benefit from further advances in the field of Telemedicine and Digital Health, including those involved in telemedicine, connected health care devices, health care analytics, and administrative digitization. That results in data from these devices, health applications, and other sources that can offer preventative health benefits when paired with genomic information and data from the broader health community.

Importantly, BTEC isn't beholden to a particular outcome come Election Day.

“Based on the importance of these similarities relative to their (Biden and Trump) differences, combined with uncertainty of either candidate delivering on campaign rhetoric, we do not expect the election to have a significant impact on the biotechnology and pharmaceutical market as a whole in the short- to medium-term,” notes Et al BioCapital.

For more on multi-factor strategies, visit our Multi-Factor Channel.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.