Is the global battle against obesity an opportunity for investors?

Obesity is one of the biggest issues for health care professionals, but for those companies at the forefront of tackling it, the returns could be phenomenal.

The World Health Organization recently reported that obesity has doubled globally since 1990 and in 2022, the proportion of people deemed obese was one in eight – that’s around 16% of the world’s adult population.

Firms that are driving the battle against obesity include Novo Nordisk, manufacturer of Ozempic and Wegovy, and Eli Lilly, which makes Mounjaro and Zepbound. Recent analysis of the market by Morningstar reveals that these companies’ stocks have surged 57% and 61% respectively over the past 12 months.

But the report suggests that some other industry players have seen declines, such as 8% for Roche and 39% for Pfizer.

“While Eli Lilly and Novo deserve a premium, the current valuations seem to imply too much of a premium, and don’t fully factor in the challenges from pricing, competition, and side effects,” says Damien Conover, director of healthcare research for Morningstar.

For investors who want exposure to the obesity solutions industry, there are many thematic funds including innovative healthcare and pharmaceutical companies, but those with a specific obesity focus are fewer in number. One of them, The Obesity Fund (SLIM), was liquidated by Janus Henderson in 2020.

But niche issuer Tema is betting that obesity is a theme that investors will be looking for and has announced the renaming its Tema Cardiovascular and Metabolic ETF to Tema Obesity and Cardiometabolic ETF as of March 25. It will continue to trade on the Nasdaq with the ticker HRTS.

The fund offers investors exposure to companies focused on obesity, diabetes, and other cardiometabolic diseases.

"HRTS is focused on providing long-term growth by investing in companies that we believe are at the forefront of the fight against these diseases,” said Maurits Pot, CEO and founder of Tema. “The obesity and weight loss drug market is projected to reach $150 billion by 2031, with over a billion people worldwide living with obesity today. Innovations in the biopharmaceutical industry, including GLP-1 agents, are heralding a new era of treatments.”

Those investors what want to take a slightly left of center route to potential returns from successful treatment of obesity could look at the U.S. Global Jets ETF.

As a Nasdaq.com article opines, the obesity-related gains for this fund, which as the name suggests invests in stocks of the airline industry, comes from simple science.

“The more obese passengers there are on a particular flight, the great a carrier’s fuel expenses are … fuel is this industry’s second-largest input cost after labor and if fuel savings can be realized thanks to Ozempic and friends, that could benefit carriers and JETS investors,” wrote author Todd Shriber.