Bird Flu Sparks Vaccine Stock Surge: ETFs To Watch As H5N1 Outbreak Intensifies

The U.S. reported its first human death from the H5 bird flu strain this week, causing a spike in vaccine developer stocks Moderna MRNA, Novavax NVAX, CureVac CVAC and Pfizer PFE.

Vaccine production efforts are ramping up as health officials monitor the outbreak closely. In an update on Monday, CDC said there have been 66 confirmed cases in the U.S. in the 2024 outbreak.

CDC said the public risk remains low. Bird flu has severely impacted poultry farms and cattle herds across 16 states, marking the worst outbreak of its kind.

Vaccine Providers in the Limelight

In the U.S., vaccines against H5N1 are already stockpiled. Approved shots include those from Sanofi SNY, CSL Seqirus, and ID Biomedical Corporation of Quebec, a subsidiary of GlaxoSmithKline GSK, which collectively secured $72 million in funding from the U.S. health department in October to boost the production of bird flu vaccines. These traditional vaccines, developed years ago, target older H5N1 strains but are expected to offer some protection.

Moderna, backed by $176 million from the U.S. government's BARDA, is working on an updated mRNA H5N1 vaccine. Other players, including Pfizer and GSK (in collaboration with CureVac), are testing similar candidates.

ETFs in Focus

For investors who want to play the trend but are wary of choosing individual biotech stocks, here are three ETFs that offer diversified exposure to the biotech companies leading the vaccine efforts. With a mix of traditional and mRNA vaccine developers in focus, these funds could benefit as the world prepares for a potential bird flu pandemic.

iShares Genomics Immunology and Healthcare ETF IDNA tracks the NYSE FactSet Global Genomics and Immuno Biopharma Index, and has already gained 2.5% so far this year. The fund has an expense ratio of 0.47%, and $129.97 million in assets under management (AUM). The fund has currently invested 4.48% of its assets in Moderna. Sanofi, GSK and Novavax are also part of its portfolio of 51 equity holdings.

First Trust Nasdaq Pharmaceuticals ETF FTXH derives its investment strategy from the Nasdaq US Benchmark Index, and has an expense ratio of 0.60%. Pfizer is one of its top holdings, with 7.28% of assets allocated to it.

SPDR S&P Biotech ETF XBI mirrors the S&P Biotechnology Select Industry Index, and charges a 0.35% expense ratio. Out of its present AUM of $6.37 billion, Moderna holds 2.58%. Almost 100% of its holdings are exposed to the biotechnology sector, with only about 0.04% invested in the pharmaceutical sector.

The Bird Flu Menace

The bird flu scare in humans ratcheted higher in late 2024 when a 13-year-old girl in Canada fell critically ill with H5N1 and required a ventilator. Around the same time, the U.S. reported its first severe case in an elderly patient in Louisiana.

Health experts warn that vigilance is key to preventing mutations that could trigger a pandemic. While the technology to develop vaccines quickly is available, governments may need to fund large-scale clinical trials in advance to ensure rapid distribution in case of a health emergency.

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