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BioShares Biotechnology ETFs complete semi-annual rebalance and recomposition BBC and BBP


LifeSci Index Partners has completed its semi-annual rebalancing and recomposition for its BioShares Biotechnology exchange-traded funds (ETFs), which trade under the symbols BBC and BBP on Nasdaq. 

These passively-managed funds are designed to track their respective, rules-based indexes. Both funds have increased in number of holdings, and have rebalanced to equally weight position sizes.

The BioShares Biotechnology Funds are the only ETFs to separate Clinical Trials stage companies and Products stage companies into two distinct funds. The BioShares Biotechnology Clinical Trial Fund (BBC) and BioShares Biotechnology Product Fund (BBP) offer investors exposure to these segments of the biotechnology sector while diversifying some of the risks associated with any one company.

The BBC fund has increased its number of holdings to 90 stocks (previously 67), with a weighted average capitalisation of approximately USD1.5 billion (previously USD2.1 billion). Thirty-one stocks have been added by meeting the inclusion criteria, seven stocks have moved to the BBP fund upon transitioning to the Products stage, and one stock has been removed due to signing a definitive merger agreement.

The BBP fund has increased its number of holdings to 39 stocks (previously 33), with a weighted average market cap of USD18 billion (previously USD18 billion). Seven stocks have moved from the BBC fund upon transitioning to the Products stage, and one stock has moved to the BBC fund upon transitioning back to the Clinical Trials stage.

"The high volume of changes in our rules-based BioShares portfolios reflects how quickly the biotechnology market is evolving," says LifeSci Index Partners co-founder, Paul Yook. "Of the 31 new companies added to BBC, 12 have completed IPOs since 2014, and 16 focus in the cancer and immuno-oncology fields. "Record new equity issuance volume in the biotechnology sector, as well as optimism surrounding new clinical stage treatments for various cancers utilising the human body's own immune system, have been among the key drivers of the sector's continued growth.

As companies successfully complete clinical trials and transition to the commercial stage, they can move to the BioShares Products fund (BBP), when sales ramp and establishing profitability becomes more important to investors. "Robust M&A activity in the biotech sector also continues to be a dominant theme, with Product stage companies being particularly attractive targets to larger pharmaceutical companies seeking higher growth," says Andrew McDonald, PhD, CEO of LifeSci Index Partners. In the first half of 2015, three companies in the BBP fund were acquired, including NPS Pharmaceuticals, Pharmacyclics and Hyperion.

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