A small New York fund issuer is seeking to capitalize on the wave of obesity drug sales with an ETF that invests in companies that make suddenly popular medications like Wegovy and Ozempic.
Tema ETFs newest fund, the Tema Cardiovascular and Metabolic ETF (HRTS) lost about 1% in afternoon trading in its debut today.
Tema, which manages $44.9 million in five funds not including the latest one, said in a press release that the fund aims to capture the growth of companies that “lead the fight against obesity and diabetes, or metabolic diseases, and cardiovascular diseases.”
The ETF holds 42 companies, including Ozempic and Wegovy maker Novo Nordisk A/S, Eli Lily & Co., maker of Mounjaro and Zepbound and others like Amgen Inc. and Vertex Pharmaceuticals INc. The fund has a 0.75% management fee and is managed by industry veteran David Song, who has two decades of life science investment experience according to the firm.
“This area has seen a recent burst of innovation transforming patient lives and outcomes,” Tema CEO Maurits Pot said in the statement.
Healthcare ETFs Outperform
The ETF launch comes as a new class of drugs transform the healthcare landscape for addressing obesity. In the past year, Eli Lilly’s stock has risen 64% while Novo Nordisk’s has shot up 82% over the past year. An August study that showed Ozempic and Wegovy cut the risk of cardiac events by 20% resulted in a 5.5% boost to the iShares Global Healthcare ETF (IXJ).
Yet even while the stock market is showing investors enthusiasm for new medications, narrowly focused thematic ETFs overall have struggled as many underperform and investors pull money from the funds. Investors have drawn about $4.7 billion from them this year, according to Bloomberg data.
“Thematic investing has had a difficult three years in part because the initial crop of funds was focused on themes that within hindsight appeared more like fads—such as metaverse,” Tema Chief Investment Officer Yuri Khodjamirian wrote in an email to etf.com. He said that Tema is “different” because they focus on long-term growth themes.
Note: Updates Tema's AUM in third paragraph.
Contact Lucy Brewster at lucy.brewster@etf.com.