This week in ETFs, two new issuers made their debut: BioShares by LifeSci Index Partners and Reality Shares. The two new BioShares funds offer investors a compelling way to make a more targeted play on the fast-growing biotechnology sector. Reality Shares’ new actively-managed ETF provides a new twist on dividend investing, focusing more on the expected growth of dividends instead of yield.
Also this week, ValueShares launched the international version of its “quantitative value” fund [see also ETF Spotlight: MSCI USA Size Factor ETF (SIZE)].
More Granular Biotech Exposure
On Tuesday, BioShares by LifeSci Index Partners launched two new funds that are aimed at providing investors unique exposure to the biotechnology industry.
The BioShares Biotechnology Products Fund (BBP) tracks the LifeSci Biotechnology Products Index, an equal weighted benchmark that is designed to measure the equity market performance of the common stock of U.S. exchange-listed biotechnology companies with a primary product offering or product candidate that has received U.S. Food and Drug Administration approval. The resulting portfolio is comprised of 36 stocks, which are primarily larger, more established companies with much clinical trial failure risk behind them.
The BioShares Biotechnology Clinical Trials Fund (BBC), on the other hand, aims to target those companies that have a primary product offering that is in a Phase 1, Phase 2 or Phase 3 clinical trial stage of development. The portfolio, which holds roughly 68 securities, is comprised of younger, smaller companies that focus on testing their experimental drug candidates in human clinical trials [see also Investing in the Future: Inside the Genomic Revolution Multi-Sector ETF (ARKG)].
Commenting on the launch, LifeSci Index Partners’ co-founder Paul Yook stated: “The landscape of the biotechnology sector has experienced dramatic shifts since the IPOs of Cetus and Genentech in the early 1980s. Our BioShares funds are designed with the current biotechnology market in mind and offer investors unique and diversified portfolios of entrepreneurial biotechnology stocks by applying our rules-based index methodology.”
Both funds charge an expense ratio of 0.85%.
A New Active ETF
Newcomer Reality Shares launched its new DIVS ETF (DIVY) today, which offers investors an actively managed strategy aimed at producing long-term capital appreciation. The fund’s investment philosophy involves the idea that a company’s dividend payments provide a more accurate measure of a company’s potential long-term value than its current stock market price.
DIVY’s strategy is referred to as an “isolated dividend growth” strategy because it “isolates” the value of a company’s expected dividend payments from the trading price of its stock and produces investment returns based on this value. Furthermore, since these strategies are based on an expected level of dividend growth, and not the trading price of equity securities, the performance of such strategies should not be directly correlated to broad equity market returns, which are based on the trading prices of equity securities.
Essentially, DIVY aims to provide exposure to the aggregate value of ordinary dividends expected to be paid on a portfolio of large capitalization equity securities listed for trading in the U.S..
DIVY charges an expense ratio of 0.85%.
International Twist on Quantitative Value
ValueShares launched its International Quantitative Value ETF (IVAL) on Wednesday. The actively-managed fund employs a systematic process to identify stocks for investment, which includes identifying mid- to large-cap international stocks, which are then screened by forensic accounting, valuation, and quality metrics.
The fund charges an expense ratio of 0.99%.
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Disclosure: No positions at time of writing.
