Pacer ETFs has unveiled a new thematic equity ETF that invests in companies providing goods and services to help humanity deal with biological threats, whether natural or man-made.
The fund offers exposure to companies from several sectors that are helping humanity deal with biological threats.
The Pacer BioThreat Strategy ETF (VIRS US) has listed on Cboe BZX Exchange and comes with an expense ratio of 0.70%.
Unlike the recently launched ETFMG Treatments, Testing and Advancements ETF (GERM US), which was inspired by the Covid-19 pandemic, VIRS has been in Pacer’s pipeline for some time.
The two ETFs offer different twists on the biothreat theme.
Whereas GERM focuses on biotechnology companies that are involved in the research, testing, and treatment of infectious diseases, VIRS goes further by also selecting non-healthcare companies that are considered to be supporting humanity in the fight against biological threats.
This could include water sanitation companies, defense contractors, providers of essential consumer items, and even technology firms enabling work from home practices.
Sean O’Hara, president of Pacer ETFs Distributors, commented, “As the world reconfigures the way businesses operate and populations protect themselves, certain companies will be critical to the integrity of the economy with this in mind. VIRS allows investors to directly access companies at the forefront of this and future health crises.”
The fund tracks the LifeSci BioThreat Strategy Index which selects its constituents from a universe of US-listed stocks with market capitalizations above $1 billion and minimum average daily trading values of $2 million.
The methodology uses publicly available information such as financial reports, corporate websites, news articles, and interviews with key opinion leaders to identify firms that are linked to seven biothreat sub-themes.
According to the prospectus, the index selects companies that are researching and treating natural pandemic diseases, detecting the presence of biological or chemical threats, combatting agents of biological or chemical warfare, securing national borders and strengthening homeland security, enabling working from home technologies, providing consumer staples that are typically stockpiled during natural disasters, and improving the safety and purity of food and water.
Constituents are weighted by market capitalization subject to a 4.9% cap per stock. The index is reconstituted annually in January and rebalanced semi-annually.