New ETF to focus on companies fighting biological threats
The Pacer fund could invest in stocks of businesses that identify or combat diseases or companies that enable social distancing
As the coronavirus pandemic rattles the globe, companies that focus on protection or recovery from biological threats could become part of an exchange-traded fund.
Pacer ETFs is planning to launch a fund that tracks an index of companies offering products, technologies and services that are currently in high demand. Those stocks range from businesses that could identify or combat diseases to those enabling social distancing and working from home, according to a filing to the Securities and Exchange Commission.
[More: Virus spawns new challenge for ESG investors]
With millions of people around the world stuck in their home offices to help contain the coronavirus outbreak, companies that specialize in remote-working products are becoming a hot spot. And while biotechnology shares haven’t been immune to the huge volatility, they’ve been withstanding it better than the broader market. Developing new drugs isn’t easy, and making bets in biotech comes with the risk of failure. Yet the potential payoff for investors can also be enormous when a new medicine succeeds.
“There is likely to be demand for a thematic diversified strategy seeking to combat biotechnology threats as COVID-19 has reshaped global economies,“ said Todd Rosenbluth, head of ETF and mutual fund research at CFRA. “However, many of these likely constituents will be in early stages of growth and profitability, while perhaps also trading at a premium due to investor optimism.”
Pacer plans to track the performance of the BioShares BioThreat Index. It seeks to include companies with at least $1 billion in market capitalization and a minimum average daily value traded of at least $2 million for the last six months.
[More: Cash is king as investors flee bond funds, active equities in March]
Learn more about reprints and licensing for this article.
