The following are new investments that those saving for or living in retirement might consider for their portfolios. This week: a new ETF focused on companies that get their revenue from genomics related business operations.
The Global X Genomics & Biotechnology ETF (GNOM) is the 13th and latest ETF from Global X and their thematic suite of ETFs, says Steve McCarten, an ETF industry consultant with nearly 20 years of experience with ETFs.
According to McCarten, GNOM seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Genomics Index. The index comprises a subset of equities classified by FactSet as healthcare companies and are only eligible for inclusion if they generate at least 50% of their revenues from genomics related business operations. The index is also market cap weighted with a single security cap of 4.0% and floor of 0.3%.
McCarten says GNOM joins an existing field of biotechnology ETFs from some well-known names like State Street (XBI) and Invesco (PBE), to some lesser known names like Ark Invest (ARKG) and First Trust (FBT). "Of note, 2019 has been a good year for the biotechnology sector to date, providing solid returns fueled in part by M&A activity, regulatory approvals, and advancements in firms' R&D activities from AI system enhancements," he says. "While designed to offer global exposure, the fund holds 86% of its assets in U.S. equities currently, indicative of the fact that much of the development in the sector is coming from U.S. companies."
McCarten also notes that GNOM has a management fee of 68 basis points while FBT charges 56 basis points and ARKG 75 basis points. "Given the fact that the ETF industry is currently in the "race to zero" management fee environment, I am a little surprised the fee for GNOM isn't more aggressively priced on the lower end of the scale for the sector," he says.
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