Two US asset managers launch weight loss ETFs

Two US asset managers launch weight loss ETFs
Two US asset managers launch weight loss ETFs

Two separate asset management companies announced Tuesday the launch of exchange-traded funds (ETFs), both designed to give investors exposure to stocks such as Eli Lilly & Co and Novo Nordisk, which are pioneers in the development of new drugs against obesity.

Amplify ETFs said its Amplify Weight Loss Drug & Treatment ETF will track the VettaFi Weight Loss Drug & Treatment Index, while the Roundhill GLP-1 & Weight Loss ETF will be actively managed by the Roundhill Investments team.

The two products take slightly different approaches to building a portfolio around the new class of drugs to treat obesity, known as glucagon-like peptide-1, or GLP-1. Roundhill plans to focus on pharmaceutical companies developing new drug therapies, while Amplify will include a 30% weighting for companies involved in related activities, such as the manufacturing, analysis or distribution of these drugs.

The number of ETFs targeting this booming segment of the pharmaceutical market appears to be exploding. In early 2020, Janus Henderson closed its own obesity-focused ETF, leaving investors with only broader pharmaceutical or healthcare fund options. But last month, Tema, another niche asset manager, rebranded and relaunched a five-month-old ETF investing in stocks targeting cardiovascular and metabolic health. The more narrowly focused Tema Obesity and Cardiometabolic ETF has gained more than $63 million since then.

However, it remains to be seen whether investors will remain enthusiastic about ETFs tied to this particular trend for long. In the first four months of the year, ETFs designed to attract investors following trends like cybersecurity, working from home, animal care or cannabis saw outflows of $2.4 billion , compared to outflows of $4.9 billion in 2023. (Reporting by Suzanne McGee in Providence, Rhode Island Editing by Matthew Lewis)

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