---
title: "S&P Biotechnology ETF, the interest rate-sensitive 'King of Pharma'"
description: "1. Introduction: S&P Biotechnology ETF (159502.SZ, US stock: XBI, triple leveraged LABU$Direxion S&P Biotech Bull 3X(LABU.US)/inverse LABD), established by Harvest Fund at the end of last year"
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/20920763.md"
published_at: "2024-05-06T08:44:25.000Z"
author: "[土鸡瓦狗的ETF🐒](https://longbridge.com/en/profiles/11794570)"
---

# S&P Biotechnology ETF, the interest rate-sensitive 'King of Pharma'

![image](https://pub.pbkrs.com/uploads/2024/01e63adf1c7c8f7bfb366b9f5bada472?x-oss-process=style/lg)

**1\. Introduction:** S&P Biotechnology ETF(159502.SZ, US stock: XBI, 3x long LABU$Direxion S&P Biotech Bull 3X(LABU.US) / short LABD), established by Harvest Fund at the end of last year(2023.12.26), tracks the S&P Biotechnology Select Industry Index(SPSIBI.SPI), with stocks weighted almost equally, T+0 trading, and an average daily turnover of 70.61 million, indicating sufficient liquidity.(as of 2024.04.30)

![image](https://pub.pbkrs.com/uploads/2024/58f652ada96c1fd9f73023a57e24994e?x-oss-process=style/lg)

Data source: ETF Research, 20240430

**2\. Investment Logic**

**1\. Investment Logic:** Since I wrote about the logic of pharmaceutical investment at the end of last year👉([Nasdaq Biotechnology ETF, Live & Life](http://mp.weixin.qq.com/s?__biz=MzU0NDk1OTkyMg==&mid=2247484298&idx=1&sn=d1945b945753ac27dc92db4794f5760a&chksm=fb757f57cc02f64111b5ee60c8c64bf9728124e8b9137746574992840490b72397f276eb6881&scene=21#wechat_redirect)), writing this article again seems redundant, so I delayed writing it. However, the S&P Biotechnology ETF is one I frequently use for mid-term volatility in the pharmaceutical sector.

![image](https://pub.pbkrs.com/uploads/2024/47a69b61d9bf1d8b3251e5478c8c534d?x-oss-process=style/lg)

**As shown in the figure, compared to the Nasdaq Biotechnology ETF**, the S&P Biotechnology ETF: ① selects companies registered in the US, ② has smaller market caps than those in the Nasdaq Biotechnology ETF, ③ benefits more from expectations of lower floating interest rates improving balance sheets, and ④ exhibits greater stock price volatility as interest costs decline and M&A activity in the primary market heats up.  

**2\. Other Targets (LOF):** There is another S&P Biotechnology LOF (161127.SZ) in the A-share cross-border ETF market, but it has low transparency in holdings and large pricing errors. After the launch of the S&P Biotechnology ETF, funds have flowed from the former to the latter.

**3\. Investment Observations:** As shown below, the observation indicators are clearly stated. Last Friday (20240503), the non-farm payroll data came in below expectations, leading to earlier expectations of a Fed rate cut. The 10Y US Treasury yield started a downward trend. I emphasized repeatedly in my knowledge planet and this article ([Nvidia NVDA dropped 10% overnight, S&P 500 Index .SPX corrected 5% deeply—should we cut losses or buy gradually?](http://mp.weixin.qq.com/s?__biz=MzU0NDk1OTkyMg==&mid=2247484680&idx=1&sn=db9b14f0042e618341c5bd6ef5603438&chksm=fb7579d5cc02f0c3d9b866ae672068a2c499bce228d506d5c9ed41274a69012d698497f05b43&scene=21#wechat_redirect)) that in a "soft landing" scenario, US stocks offer better value than US Treasuries. Simply put, TMF ([20+ Year Treasury Bond ETF, Trying to Break the Investment "Impossible Triangle"?](http://mp.weixin.qq.com/s?__biz=MzU0NDk1OTkyMg==&mid=2247484392&idx=1&sn=e61d1d0f39561bed9b95ee8701526ad9&chksm=fb757f35cc02f62368ecfe9efaa7f8c50db11d5c294e60f03a83c3589cca63a89f3af6cfcf2e&scene=21#wechat_redirect)) is less attractive than the S&P 500 ([S&P 500 Index (.SPX) Investment Logic](http://mp.weixin.qq.com/s?__biz=MzU0NDk1OTkyMg==&mid=2247484693&idx=1&sn=84981e9e48beb876aad343792df9a5c2&chksm=fb7579c8cc02f0de09c9da60084283293cf3a59b83a5efc604e0fa1f1792aba23eb4394b20e8&scene=21#wechat_redirect)).

![image](https://pub.pbkrs.com/uploads/2024/2ff8a48f0a0403b03f5d56b209856bbc?x-oss-process=style/lg)

① The S&P Pharmaceuticals sector has strong trends. Once a rally starts, it often leads to a strong upward movement. Factors involved include primary market financing enthusiasm, earnings drivers, and the impact of 10Y US Treasury yield fluctuations on valuation denominators for pharmaceutical stocks.  

② Hong Kong pharmaceutical stocks are closely related to US pharmaceutical stocks (as shown below). Orders for Hong Kong innovative drugs are significantly affected by overseas markets, and some A-share pharmaceutical companies participate in overseas OEM.

![image](https://pub.pbkrs.com/uploads/2024/45673eb4a0979a78c99f21c28a1f8408?x-oss-process=style/lg)

### Related Stocks

- [LABU.US - Direxion S&P Biotech Bull 3X](https://longbridge.com/en/quote/LABU.US.md)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.