Update-1 SMID biotechs rally underway as all there of our tracking ETFs are up ARKG up 5.6% , IBB, up 1.57%, XBI up 1.345 as a broad based rally pullls many stocks to new highs. Interest rate cut is “baked in”.
- New small cap picks are all up: CBIO, PSNL, XNCR.
- Personalis (PSNL) big mover: new breast cancer test
- Select movers from our trading list: ADPT<CAI.CRMD, SUPN ,PTGX,ROIV,TEM,VCYT,VCEL.
Healthcare Stocks are Still Lagging-Where can you invest in Health Sciences?
- Our favorite sectors of healthcare going forward are: SMID biotechs, Large Cap Biopharma and U.S.Medical Device (MedTech) because all should benefit from Innovation.
- Despite crosscurrents from Administration policies in healthcare and R&D funding for the life science sector,ETF trends indicate good demand .
- Precision oncology is an emerging niche market enabled by genomics and AI: MRDs and liquid biopsies.
I’m expecting a boost in the Healthcare and Biotech Sector tomorrow from the Morgan Stanley Global Health Conference.
Equity Portfolio Overview
XLV at $137 down 0.3% YTD, SPY at $647 up 10.48% YTD, QQQ at $578 up 13.23% YTD (record high).
Healthcare stocks continue to lag the this bull market with the S&P 500 (SPY) up 10.2 % YTD. The sector leaders are : Utilities, Industrials, Technology , Financials, and Communication Services. The lowest perfornance YTD are Consumer Discretionary , Staples, and Healthcare. Although the leadership may bounce around among the sectors depending upon the MACRO and economic data, most strategists believe that Technology and Semiconductor stocks will remain at the top.because of the importance of data and embedded chips in most products.. The XLK technology SPDR is up about 15% YTD and the SOXX is up 16%. Moreover the S&P weighting reflects the MEGACAP technology weighting (MAGS) because of AI with Technology at 30% and healthcare only about 12.%. Still some market gurus tout the need for a diversified portfolio to mitigate the uncertainty and risk of AI and a weakening economy. THe IXJ a healthcare ETF is more weighted with International stocks and is doing a little better up 2.44%. A Contrarian viewpoint is that healthcare markets are so huge at $$T and being data dependent are poised for disruption particularly managed care. So look for deals or companies that employ AI to improve productivity in patient care.What needs to happen is that a new paradigm like AI or new technogy like MRDs in precision oncology gets integrated into the medical system to improve patient care.
Allocation of Capital in your Portfolio.
So within healthcare how should you position your portfolio: generalist funds, health and science funds and niches within healthcare like pharmaceuticals and Medtech? If you have been reading regent.com, you know that healthcare ETFs and Funds are not keeping up with the S&P 500. And you are not familiar with healthcare stocks or you have been burned by providers and insurance companies like UNH down 37% YTD and IHF, which until 2025 gave you 8-10% annual returns on autopilot. Are you an investor or trader and if youdon’t feel ready to trade individual stocks how do you develop a healthcare portfolio? Well first you need to consider a biotech position or look at some popular FUNDS in this sector:
- Healthcare providers are normally defensive but the UNH problem created an unprecedented upheaval with the US Healthcare Providers (IHF) down 0.69% YTD at $47.66 off a recent high of $54.
- MEDTech and Life Science stocks always offer trading opportunities although many are small and mid-caps Some analysts think US Medical devices and sevics are less affected by tariffs although many companies reported a “supply chain” impact on cost of goods. The TOP TEN holdings of the IHI include some of the most innovative companies worldwide: ABT,BSX, ISRG and SYK. The U.S Medical Device (IHI) is up 7.02% YTD despite some choppiness caused by tariffs concerns.
- Most of the MedTech ETFs and Funds overweight the same large caps: ABT, BSX, DHR, ISRG, TMO, SYK.
- Here are a few life science funds that are well known and have performed well in bull markets for biotech and MedTech:
Fidelity Select Biotech Portfolio ( FBIOX) up 12% YTD. This has been a good year for FBIOX and it outperfomed other biotech funds because of timely large cap picks like ABBV, ALNY, GILD, and good mid-cap picks INSM and KRYS.
Janus Henderson Global Life Sciences (JNGLX) up 3.83% YTD.Top holdings include AZN, BSX,JNJ, LLY, has more weighting on the MedTech and device stocks.
Fidelity Select Medical Technology and Devices (FSMEX) down 3.09% YTD. Top Holdings heavily skewed to device side with ABT, BSX, DHR, ISRG and TMO.
BIOTECHNOLOGY stocks are poised for more Gains in Q4
FOCUS on SMID Cap Biotechs for INNOVATION
We recently reviewed two of our favored sub-sectors in healthcare Large Cap Biopharmaceuticals and Small and MidCap SMID Biotechnology. We have outperformed the SPY with 5-7 large cap biopharma stocks in 2025 and have favored ABBV, GILD, LLY and VRTX since Q4 2024. And we recently added AZN BIIB and NVS. Stock selection in the SMID group can require a more speculative frame of mind but if the momentum continues our stocks will do well. We use three ETFs to track sentiment in biotech: ARKG, IBB and XBI. When 2/3 are having good relative strength it usually gives a buy signal for our trading list. We added three small cap biotechs to our trading list last week: CBIO, PSNW and XNCR.
Review the charts above for tecnhnicals and momentum in biotech sector: IBB up 7.565 YTD , at $142 off April low of $111.76.
Selected Stocks and Funds in Healthcare. Compared to market indices.
| Model | |||||||||||||
| PORTFOLIO | * | ||||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | 2023 | 2025 | 5 yr % | MTD | |||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | Price | Price | ||||||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | 12/31/22 | 11/23 | 8/31 | %Perf | % | % | |||
| P | P | YTD | 5yr | 1 mo | |||||||||
| iShares NAZ Bio | IBB | 136 | 10 | 151.5 | 25.7 | 152.62 | 130.55 | 115.53 | 138.22 | 4.55 | 3.89 | 3.26 | |
| iSharesGobalH | IXJ | new | 87.66 | 1.97 | 20.26 | 2.23 | |||||||
| iShares S&P SmC | IJR | new | 178.82 | -7.64 | 77.21 | 10.47 | |||||||
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | 174.36 | 175 | 233.04 | 12.08 | 80.26 | 13.33 | |
| Merck* | MRK | 80 | 10 | 81.77 | -10 | 76.64 | 115 | 101 | 84.45 | -15.04 | 3.17 | 4.58 | |
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | 530.27 | 541.21 | 306.17 | -199.69 | -5.83 | 27 | |
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | 83 | 66.95 | 93.84 | 3.28 | -11.88 | 6.59 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | 135.88 | 126.27 | 136.69 | -0.88 | 30.99 | 3.68 | |
| T.Rowe Price** | PRHSX | n/a | 5 | 99.65 | n/a | 104 | 89 | 83.41 | 79.99 | 0.46 | -8.61 | 2.63 | |
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | 52.57 | 45.75 | 61 | 2.65 | 12.1 | -0.1 | ||
| MedTech* | ABT | 5 | 123.5 | 127.46 | 109.83 | 94 | 131.34 | 18.23 | 27.18 | 1.41 | |||
| Diversfied MED | JNJ | 177.53 | 32.91 | 29.01 | 6.56 | ||||||||
| Tracking Comp | |||||||||||||
| and Funds | |||||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | 28.23 | 24.1 | 24.78 | 1.23 | -31.51 | 0.63 | ||||
| Direx3X Bull | LABU | 7.66 | 2.74 | 76.8 | -13.2 | -854.6 | 13.35 | ||||||
| VanEck BIO | BBH | 165.47 | 8.5 | 10.7 | 0.29 | ||||||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | 16.04 | 14.39 | 20.78 | 1.88 | -1.55 | 1.07 | ||||
| FiDO MEDtech | FSMEX | 76.15 | 83.18 | 60.04 | 51.64 | 59.83 | -2.36 | -6.74 | 1.08 | ||||
| JanusHendLifeSc | JNGLX | 69.62 | 1.73 | 3.62 | 3.09 | ||||||||
| DOW | DIA | 310 | 363.32 | 331.34 | 343 | 451.31 | 25.81 | 169.54 | 9.5 | ||||
| S&P 500 | SPY | 379 | 475 | 382.41 | 440 | 640.84 | 54.76 | 298.27 | 9.67 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | 266.33 | 378.39 | 567.37 | 56.14 | 283.79 | 3.31 | ||||
| Technology SPDR | XLK | 128.93 | 161.97 | 124.44 | 179.52 | 259.92 | 27.4 | 141.8 | -2.42 | ||||