BlackRock has launched two new thematic ETFs in the US, providing exposure to firms linked to the cybersecurity and genomics immunology industries.
The underlying indices utilize the Revere Business Industry Classification System (RBICS) to home in on the relevant sub-industries related to the cybersecurity and genomics themes.
The funds, which have been listed on NYSE Arca with expense ratios of 0.47%, are the iShares Cybersecurity and Tech ETF (IHAK US) and the iShares Genomics Immunology and Healthcare ETF (IDNA US).
They form part of asset manager’s iShares ‘megatrend’ suite.
The indices underlying the funds have been created by ICE Data Indices, the indexing division of Intercontinental Exchange.
Each index covers stocks from both developed and emerging markets that are listed on exchanges easily accessible by foreign investors.
Eligible securities must have a minimum float-adjusted market capitalization of $300 million and a three-month average daily trading value of $2m.
The indices harness the Revere Business Industry Classification System (RBICS) developed by FactSet which screens for firms that generate more than 50% of their revenue from sub-industries linked to the relevant theme.
The NYSE FactSet Global Cyber Security Index, underlying the cybersecurity ETF, selects all firms that satisfy the above requirements.
The NYSE FactSet Global Genomics and Immuno Biopharma Index, underlying the genomics immunology ETF, goes a step further. All securities that pass the RBICS revenue screen are then analyzed using the FactSet Supply Chain Relationships database which assigns a score to each firm based on the number of keywords within company documents that relate to genomics and immuno-biopharmaceutical products and technologies. The 50 highest-ranked firms are selected for inclusion in the final index
Constituents in both indices are weighted by market capitalization subject to a 4% cap per stock. Reconstitution occurs annually in December, while the indices are rebalanced semi-annually.
There are currently two other genuiely pure-play cybersecurity ETFs listed in the US. The largest is the ETFMG Prime Cyber Security ETF (HACK US) with over $1.5bn AUM. It comes with an expense ratio of 0.60%. The other is the First Trust NASDAQ Cybersecurity ETF (CIBR US) which has nearly $900 million in AUM and also charges 0.60%.
On the genomics front, Global X introduced the first passive ETF to cover this space – the Global X Genomics & Biotechnology ETF (GNOM US) – earlier this year. It comes with an expense ratio of 0.68% and has yet to gather any significant AUM. The actively managed ARK Genomic Revolution ETF (ARKG US), however, houses around $400m AUM. Focusing on US-listed genomics firms, this fund comes with an expense ratio of 0.75%.
Commenting on the expansion of the megatrend suite, Armando Senra, Head of U.S., Canada and Latin America iShares, said, “The iShares megatrend ETF suite seeks to capture the most powerful investment trends driving the global economy today, and that we expect to play out for decades to come. The ability for anyone to access these targeted growth opportunities through an ETF represents the next frontier of efficiency, transparency and the democratization of investing.”