Covid-themed ETF shifts focus to monkeypox

If there’s a mantra in the ETF space, it might be: If at first you don’t succeed, repackage.

That’s sort of what's happening with the ETFMG Treatments Testing and Advancements ETF (GERM), which launched in 2020 to tap into efforts to fight Covid but has recently shifted its marketing pitch toward monkeypox, which the Biden Administration has declared a public health emergency.

The $29 million fund from the $4.5 billion boutique shop ETF Managers Group is still made up of the same underlying investments that were gathered at the start of the global pandemic but is now trying to catch a ride on whatever momentum is building around efforts to fight monkeypox.

“The broad portfolio is targeting any type of pandemic or virus in society,” said Alex Gordon, director at ETFMG.

Gordon said the idea behind GERM has always been to offer something beyond standard pharmaceutical company exposure, which is why the fund has a 30% crossover with the biotechnology sector, holdings-wise, but only a 14% crossover, weightings-wise.

“We didn’t want to provide a fund dominated by pharma,” he said. “We have some representation to pharma but on a much smaller scale.”

Top weightings in the fund include Laboratory Corp. of America Holdings (LH), Quest Diagnostics (DGX), Moderna (MRNA) and Alnylam Pharmaceuticals (ALNY).

The fund is described as providing exposure to a subsector of the biotech industry, which is generally in line with ETFMG’s subsector strategy.

Other examples of where the ETF provider offers fine-tuned exposure includes the ETFMG Travel Tech ETF (AWAY), ETFMG Prime Security ETF (HACK) and ETFMG Alternative Harvest ETF (MJ).

In terms of performance, GERM, which charges 68 basis points, has been riding the market extremes with a 24% decline so far this year, following a 14% gain last year.

“I would put this more into the growth bucket,” Gordon said. “It has been driven down by the market. But these companies and this entire episode we’ve experienced with Covid are not leaving.”