Biotech, bitcoin, and gold ETFs may be among the best bets for investors next year thanks to the effects of the Federal Reserve’s interest rate cuts, according to iShares, BlackRock Inc.’s $3 trillion ETF unit which published its 2025 outlook today.

Also looking good next year, according to New York-based iShares 2025 Thematic Outlook: companies involved in physical infrastructure thanks to the 2021 bipartisan spending bill, including manufacturing, home building, and artificial intelligence, which, the outlook wrote, is experiencing “massive investment.”

The outlook arrives in an environment of declining interest rates, as the financial world begins planning the coming year while tallying up its 2024 performance. Two interest rate cuts this year will help rate-sensitive industries such as hard-hit biotech, according to the study authored by Jay Jacobs, BlackRock’s U.S. Head of Thematic and Active ETFs.

“Should rates continue to fall, it could reduce financing costs and potentially give biotech firms more confidence to expand R&D budgets,” the report stated. “Higher rates have had a particularly negative impact on biotech firms by shrinking valuations and driving up borrowing costs, causing many companies to reduce R&D spending.”

Biotech ETFs have underperformed broader markets this year, particularly as the Fed, before it began trimming rates this year, had rolled out its most aggressive cycle of rate hikes in decades that damaged biotech firms’ abilities to borrow. The iShares Biotechnology ETF (IBB) has dropped 1.6% this year, the SPDR S&P Biotech ETF (XBI) has gained 3%, while the S&P 500 as measured by the SPDR S&P 500 ETF Trust (SPY) gained 24%.

Lower interest rates may also boost bitcoin further, the report said, noting that “changes in real interest rates (nominal interest rates minus inflation) do tend to impact non-interest paying assets like bitcoin and gold as they change the opportunity cost of these assets compared to income-paying investments like bonds.”

The report highlighted that infrastructure spending should remain robust due to $720 billion in 2021’s bipartisan Infrastructure Investment and Jobs Act still to be allocated. Artificial intelligence’s ecosystem is still being built and spending should remain solid in years to come, the authors said.

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