Biotech sector has performed better than the broader healthcare space this year. And within the biotech sector, smaller companies have done much better than their larger counterparts.

Thanks to tax reform, large healthcare companies are now able to access billions of dollars of cash that was parked overseas. Lower tax rates are also helping these companies.

Thus, cash-rich biotech and pharma giants are looking to acquire smaller, innovative biotech companies, even at hefty premiums, to build their pipelines.

The space has witnessed very strong M&A activity this year and the trend is expected to continue in the coming months.

There have been more than $190 billion worth of biotech and pharma deals announced globally so far this year, according to Dealogic, on track to exceed the record of $315 billion set in 2015.

Further, the FDA has approved many innovative drugs and therapies in recent months in areas like cancer treatment, gene therapy etc. Due to these innovative drugs, some of the earlier blockbuster drugs are no longer in demand and bigger companies are looking for new successful drugs.

Which ETFs are best positioned to benefit from this trend? Find out in the video above where we highlight the iShares Nasdaq Biotechnology ETF (IBB - Free Report), the SPDR S&P Biotech ETF (XBI  - Free Report) and the First Trust NYSE Biotechnology ETF (FBT - Free Report).