(Bloomberg) — Money is flooding into exchange- traded funds (ETFs) focused on health care at the fastest rate in at least six years, driven by booming biotechnology and pharmaceutical sectors bringing new products to market.
In 2014, 51 percent of money flowing into U.S. sector- focused ETFs, or $4.06 billion through Feb. 28, was for health- care funds, according to data compiled by Bloomberg. Health-care funds are attracting a greater share of total ETF contributions than at any time since at least 2008.
“People thought drug development was dead and all there was was a patent cliff,” Doug Foreman, chief investment officer at Kayne Anderson Rudnick Investment Management in Los Angeles whose firm oversees about $9 billion, said referring to the loss of exclusivity for top-selling brand-name medicines. “There isn’t a day that goes by that some company doesn’t report positive results from a trial and the stock is up 100 percent.”
Exchange-traded funds are securities that track an index or basket of stocks or bonds in a given market or industry sector. They can be easily traded and come with low costs.
U.S. ETF inflows totaled $183 billion in 2013, , according to Bloomberg data.
President Obama became president in 2008 and signed the Patient Protection and Affordable Care Act (PPACA) in 2010.
After Obama signed PPACA, health-care ETFs suffered $945 million in asset outflow. The health-care ETF sector was the worst-performing ETF sector.