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With the coronavirus pandemic leading to lockdowns and social distancing, some industries are seeing a huge surge, especially e-commerce and biotech. The epidemic has also brought new opportunities for biotech companies that are developing and creating vaccines and treatments for COVID-19.
In order to capitalize on the trend, Pacer Financial has filed for Pacer BioThreat ETF with the Securities and Exchange Commission, to enjoy the first-mover advantage. The proposed ETF will trade under the symbol VIRS and provide investors an option to capitalize on this unprecedented situation.
While key information, such as expense ratio and holdings breakdown, was not available in the initial release, other important points were released in the filing. Here’s an insight into the filed ETF:
Inside VIRS
The new ETF is a passively managed fund that looks to follow the the BioShares BioThreat Index. The benchmark is composed of U.S.-listed companies that search for diagnostic, pharmaceutical, behavioral and other tools to protect and help people recover from current and emerging threats, including diseases caused by viruses and chemical warfare agents.
The index will include research companies with products, technologies or services that enable “social distancing and increased productivity for working and shopping at home,” secure national borders and ports, aid in stockpiling products in times of natural disasters, and test and improve food and water safety and purity (read: A Pureplay Work-From-Home ETF in the Offing).
How Does It Fit in a Portfolio?
This thematic fund, if approved, could be an interesting option for investors seeking an exposure to biotech companies that are involved in research on or combating pandemic diseases such as the novel coronavirus (COVID-19), Zika, H1N1, Ebola, avian flu, and MERS.
Currently, coronavirus has made the biotech sector hot as bellwethers like Gilead Sciences Inc. (GILD - Free Report) and Regeneron Pharmaceuticals Inc. (REGN - Free Report) are showing strong potential to treat COVID-19. According to the survey conducted by Cowen, investors are most optimistic on biotech stocks since early 2019. About 52% of investors expect large-cap biotech stocks to continue beating the market in 2020, while 56% saw mid-cap biotech as primed to outperform (read: Coronavirus Makes Biotech ETFs Red Hot).
Regeneron was the most favored large-cap stock while Immunomedics Inc. , MyoKardia Inc. , and Iovance Biotherapeutics Inc. (IOVA - Free Report) are the most-favored stocks among smaller companies, according to the survey.
Competition
While the new product doesn’t have a direct contender providing exposure to such a theme, a number of products tracking biotech stocks could give tough competition to the proposed BioThreat ETF.
ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report) has accumulated $730.4 million in AUM and charges 75 bps in annual fees. It is an actively managed ETF, focusing on companies likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments plus improvements and advancements in genomics into their business (read: Ride Out the Coronavirus Mayhem With These ETF Areas).
Invesco Dynamic Biotechnology & Genome ETF (PBE - Free Report) offers exposure to companies that are principally engaged in the research, development, manufacture, and marketing and distribution of various biotechnological products, services and processes and companies that benefit significantly from scientific and technological advances in biotechnology and genetic engineering and research. The fund has AUM of $224.9 million and charges 57 bps in annual fees.
ALPS Medical Breakthroughs ETF (SBIO - Free Report) , having AUM of $183.6 million and expense ratio of 0.50%, could also pose threats to the new coronavirus ETF. This fund provides exposure to companies with one or more drugs in Phase II or Phase III FDA clinical trials.
The proposed fund, if approved, could give investors a pure play to thematic investing in the biotech sector. It will not be difficult for the proposed ETF to garner enough investor interest for the ongoing threats related to the virus and generate decent total returns net of expense ratio.
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First-Mover Pandemic Disease Fight ETF On The Way
With the coronavirus pandemic leading to lockdowns and social distancing, some industries are seeing a huge surge, especially e-commerce and biotech. The epidemic has also brought new opportunities for biotech companies that are developing and creating vaccines and treatments for COVID-19.
In order to capitalize on the trend, Pacer Financial has filed for Pacer BioThreat ETF with the Securities and Exchange Commission, to enjoy the first-mover advantage. The proposed ETF will trade under the symbol VIRS and provide investors an option to capitalize on this unprecedented situation.
While key information, such as expense ratio and holdings breakdown, was not available in the initial release, other important points were released in the filing. Here’s an insight into the filed ETF:
Inside VIRS
The new ETF is a passively managed fund that looks to follow the the BioShares BioThreat Index. The benchmark is composed of U.S.-listed companies that search for diagnostic, pharmaceutical, behavioral and other tools to protect and help people recover from current and emerging threats, including diseases caused by viruses and chemical warfare agents.
The index will include research companies with products, technologies or services that enable “social distancing and increased productivity for working and shopping at home,” secure national borders and ports, aid in stockpiling products in times of natural disasters, and test and improve food and water safety and purity (read: A Pureplay Work-From-Home ETF in the Offing).
How Does It Fit in a Portfolio?
This thematic fund, if approved, could be an interesting option for investors seeking an exposure to biotech companies that are involved in research on or combating pandemic diseases such as the novel coronavirus (COVID-19), Zika, H1N1, Ebola, avian flu, and MERS.
Currently, coronavirus has made the biotech sector hot as bellwethers like Gilead Sciences Inc. (GILD - Free Report) and Regeneron Pharmaceuticals Inc. (REGN - Free Report) are showing strong potential to treat COVID-19. According to the survey conducted by Cowen, investors are most optimistic on biotech stocks since early 2019. About 52% of investors expect large-cap biotech stocks to continue beating the market in 2020, while 56% saw mid-cap biotech as primed to outperform (read: Coronavirus Makes Biotech ETFs Red Hot).
Regeneron was the most favored large-cap stock while Immunomedics Inc. , MyoKardia Inc. , and Iovance Biotherapeutics Inc. (IOVA - Free Report) are the most-favored stocks among smaller companies, according to the survey.
Competition
While the new product doesn’t have a direct contender providing exposure to such a theme, a number of products tracking biotech stocks could give tough competition to the proposed BioThreat ETF.
ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report) has accumulated $730.4 million in AUM and charges 75 bps in annual fees. It is an actively managed ETF, focusing on companies likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments plus improvements and advancements in genomics into their business (read: Ride Out the Coronavirus Mayhem With These ETF Areas).
Invesco Dynamic Biotechnology & Genome ETF (PBE - Free Report) offers exposure to companies that are principally engaged in the research, development, manufacture, and marketing and distribution of various biotechnological products, services and processes and companies that benefit significantly from scientific and technological advances in biotechnology and genetic engineering and research. The fund has AUM of $224.9 million and charges 57 bps in annual fees.
ALPS Medical Breakthroughs ETF (SBIO - Free Report) , having AUM of $183.6 million and expense ratio of 0.50%, could also pose threats to the new coronavirus ETF. This fund provides exposure to companies with one or more drugs in Phase II or Phase III FDA clinical trials.
The proposed fund, if approved, could give investors a pure play to thematic investing in the biotech sector. It will not be difficult for the proposed ETF to garner enough investor interest for the ongoing threats related to the virus and generate decent total returns net of expense ratio.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>