Invesco Nasdaq Biotechnology ETF (IBBQ)

The Fed lifted market confidence amid economic uncertainty, leading to a rally in the U.S. stock market.

IBBQ is a relatively new U.S. biotech ETF that competes with established peers like IBB and XBI. IBBQ has outperformed both since its June 2021 launch date. However, there are specific risks investors should consider first. In addition to the volatile nature of the biotech industry, I'll review IBBQ's liquidity, concentration, and quality features in detail. IBBQ also has a high liquidation risk. With only $38 million in assets under management and a 0.19% expense ratio, IBBQ likely isn't a profitable product for Invesco.

Following a multiyear run of disappointment, biotech stocks and related ETFs are showing signs of life. For the past 90 days ending February 29, the widely observed Nasdaq Biotechnology Index was higher by almost 17%.

The Nasdaq Composite and the S&P 500 hit new all-time high Friday. However, there are chances of further rally.

The biotech space staged a strong comeback at the start of 2024, driven by multi-billion dollar deals, upbeat clinical results and cutting-edge medical advances like CRISPR gene-editing hitting prime-time.

Wall Street witnessed an upbeat December due to moderation in inflationary pressures, the likelihood of Fed rate cuts in 2024 and decent corporate earnings.

Bank of America expects the Gilead Sciences to jump about 30%, as quoted on CNBC.

The FDA advised to Pfizer, Moderna and Novavax to manufacture single-strain jabs targeting the omicron subvariant XBB.1.5 should prove to be a victory for some biotech ETFs.

Shares of drugmakers Sanofi and Regeneron surged more than 6% on Mar 23 on COPD drug data.

How a recession could impact health care stocks in 2023. As Covid continues, what it could mean for the health care sector.

The pharmaceuticals/biotechnology subsector has good value and quality scores. The healthcare equipment industry is significantly overvalued.

Recognition that aging populations will give rise to new healthcare needs and heightened awareness of mental health issues are bringing renewed focus to neurological health. Recent advances in genomics and immunology, new diagnostics and surgeries, and reductions in stigma associated with mental health are unlocking radical progress in neuroscience this decade akin to the genomics revolution of the past two decades.

Moderna Inc (NasdaqGS: MRNA) shares surged Wednesday, lifting biotechnology sector-related exchange traded funds, after the pharmaceutical company revealed better-than-expected profit and revenue in its latest quarterly report, along with a share buyback plan. On Wednesday, the Invesco Nasdaq Biotechnology ETF (IBBQ) increased 4.2%, the ETFMG Treatments Testing and Advancements ETF (GERM) advanced 5.

Pharma and biotech ETFs are in great shape and are trading at a one-month high level.

Earlier this week, Pfizer (NYSE:PFE) announced plans to acquire Biohaven Pharmaceutical (NASDAQ:BHVN) for $11.6 billion, sparking hopes of more biotechnology consolidation activity to come. Pfizer is paying a 33% premium for the maker of Nurtec ODT, a well-known migraine headache treatment.

After disappointing in 2021, biotechnology stocks and exchange traded funds are getting shellacked this year as growth stocks fall out of favor due to rising interest rates. As experienced biotech investors know, the industry frequently trades at premiums relative to the broader market, and extreme discounts are rare.