Exchange Traded Funds (ETFs)

Introducing a Genomic-Centered ETF

While the Delta variant of COVID-19 is getting all the headlines right now, the frontiers of biotechnology are not solely confined to treating the outbreak of this pathogen.

Indeed, a great deal of effort and money is being poured into developing treatments for genomic diseases like cystic fibrosis. As there are many genomic-related biotech companies out there, each claiming to have the next “big cure” for the disease du jour, some investors might want to turn to the Global X Genomics & Biotechnology Exchange-Traded Fund (NASDAQ: GNOM) as an alternative to owning possibly volatile individual biotechnology stocks.

The stocks in this exchange-traded fund’s (ETF) portfolio are selected from a list of companies that obtain more than 50% of their revenue from gene editing, genomic sequencing, the development and testing of genetic medicines, computational genomics or biotechnology. To calculate this figure, the fund uses a natural language processing algorithm that scans public documents, including filings and disclosures, and then makes the necessary selections.

Currently, the fund’s top holdings include Intellia Therapeutics, Inc. (NASDAQ: NTLA), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), Genscript Biotech Corporation (HKG: 1548), Agilent Technologies, Inc. (NYSE: A), QIAGEN NV (NYSE: QGEN), CareDx, Inc. (NASDAQ: CDNA), Natera, Inc. (NASDAQ: NTRA) and BioMarin Pharmaceutical Inc. (NASDAQ: BMRN).

This fund’s performance has been relatively mixed, even when including the damage done by the COVID-19 pandemic. As of July 27, GNOM was down 7.68% over the past month and down 6.03% for the past three months. It is currently down 6.31% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $244.2 million in assets under management and has an expense ratio of 0.50%.

While GNOM does provide an investor with a way to profit from genomic technology, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.