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Can Moderna ETFs Gain on COVID Vaccine Update Against Variants?

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The coronavirus outbreak continues to be a major concern in the United States. The world’s largest economy has now sadly crossed another grim milestone of more than 25 million coronavirus cases, with the death toll surpassing 400,000. Raising worries, health experts are "extremely" concerned about the new coronavirus variants that have been discovered in the United States, per a CNN report. The same report also states that variants like P.1 and B.1.1.7 (first spotted in the UK) have been detected in the United States.

In the regard, emergency physician Dr. Leana Wen said that "we've seen what happens in other countries that have actually had coronavirus under relatively good control, then these variants took over and they had explosive spread of the virus, and then overwhelmed hospitals," in a CNN report.

It goes without saying that in such trying times, all eyes are on updates regarding the efficiencies of the existing coronavirus vaccines on these variants. Spreading optimism, Moderna (MRNA - Free Report) recently informed that its COVID-19 vaccine helped in developing antibodies that neutralized coronavirus variants that were first detected in the United Kingdom and South Africa, per a CNN report. 

However, Moderna’s coronavirus vaccine might see reduced efficacy against the strain first spotted in South Africa. To combat the situation, the company is developing a booster vaccine. Moderna will first examine the vaccine in the lab and in a small Phase 1 clinical trial in the United States, according to a CNN report.

Notably, Moderna received approval for emergency use of mRNA-1273 last December in the United States. This was followed by a similar authorization in Canada, Europe, the United Kingdom, Israel and Switzerland. The vaccine is under review in other countries.

Several millions of doses of the vaccine candidate have already been administered in the United States. Naturally, Moderna is expected to earn billions in revenues in 2021 from the sales of its COVID-19 vaccine.

Moderna ETFs to Gain

The competition to come up with a vaccine is opening up near-term opportunities, making the biotech sector a prospective space for investments. Therefore, we discuss a few ETFs that provide exposure to Moderna, which was up 12.2% after the announcement of encouraging vaccine update on Jan 25:

ETFMG Treatments Testing and Advancements ETF (GERM - Free Report)

This fund is designed to give exposure to biotech companies, directly engaged in the testing and treatment of infectious diseases. Focused on advancements with targeted exposure to the forefront of R&D, vaccines, therapies and testing technologies. It holds 68 stocks in its basket, with Moderna occupying the fifth spot at 4.79% share. The fund has amassed $56.5 million in its asset base and charges 68 basis points (bps) in annual fees (read: Top Sector ETFs of Record-Setting Last Week).

Principal Healthcare Innovators Index ETF (BTEC - Free Report)

This fund invests in companies that are leading the charge toward innovative solutions, rather than spending money on marketing and distribution, by tracking the Nasdaq Healthcare Innovators Index. It holds 263 stocks in its basket, with Moderna taking the top spot at 4.74%. BTEC charges 42 bps in annual fees and has AUM of $166.1 million (read: A Guide to Biotech ETF Investing Amid the Coronavirus Crisis).

VanEck Vectors Biotech ETF (BBH - Free Report)

The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. It holds about 24 securities in its basket, with 4.67% exposure to Moderna. Its AUM is $519.6 million and it has an expense ratio of 0.35% (read: ETFs to Tap AstraZeneca Mega-Deal to Buy Alexion).

iShares Nasdaq Biotechnology ETF (IBB - Free Report)

This fund seeks to provide exposure to U.S. biotechnology and pharmaceutical stocks and tracks the Nasdaq Biotechnology Index. With a basket of 283 holdings, the fund has 4.44% exposure to Moderna. It has an AUM of $10.95 billion, with an expense ratio of 0.46% (read: ETF Areas Thriving During Coronavirus Pandemic).

Another broader biotech ETF that holds companies developing tests, vaccines and therapies for coronavirus include:

SPDR S&P Biotech ETF (XBI - Free Report)

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. It has AUM of $7.94 billion and an expense ratio of 0.35%.

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