There may be a stronger case to take a position in single stocks over exchange-traded funds in the burden loss space.
Amplify ETFs and Roundhill Investments each filed a prospectus last week to launch funds focused on weight loss firms, a move that Strategas ETF and technical strategist Todd Sohn believes hinges on the performance of two dominant stocks: Novo Nordisk (NVO) and Eli Lilly (LLY).
“The important holdings are going to be Lilly and Novo Nordisk, and doubtless one or two other big names … together with a number of the manufacturers down the availability chain,” he told CNBC’s “ETF Edge” this week. “Ultimately, it’s as much as those big behemoths which are playing those drugs.”
With just two players currently on the forefront of the U.S. obesity drug market, ProShares’ Simeon Hyman questions the relevance of weight loss ETFs for investors trying to buy into the industry.
“I feel that is certainly one of the challenges each time you see an innovation like this,” the firm’s global investment strategist said in the identical interview. “If the advantages are going to incumbents, then possibly there’s not a theme per se that should be exploited.”
Strategas’ Sohn also suggested that ETFs based on themes, slightly than sectors or indices, could be falling out of favor with investors.
“I feel thematics are slightly bit on the backburner right away, especially the way in which they performed the last couple of years. I feel there’s room for them, but a couple of, it’s gonna be tough,” he said.
To date in 2024, Novo Nordisk has gained 29% and Eli Lilly is up 30%, as of Wednesday’s close. The broader Health Care Select Sector SPDR (XLV) is 7% higher throughout the same period.
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