Digging into Two Thematic Health ETFs

You can see here that while FITS has a higher focus in Durables/Apparel, BFIT has a higher focus in Food & Beverage.  (A deeper dive shows that very unsurprisingly neither ETF has Tobacco exposure!)

Another view that can help explain some of the discrepancy is the holding concentration.  While BFIT has approximately 1/3 of its exposure in the top ten stocks, FITS has nearly 60% of its exposure in the top ten.  Much of this dispersion is caused by a much higher allocation to Nike, at almost 20% of the fund (BFIT has an approximate 3% allocation).

Going back to the differential in the Food and Beverage exposure lends itself to another differential:

• FITS invests in companies “… that are positioned to profit from servicing those participating in health and fitness activities”.
• BFIT invests in companies “… that provide products and services aimed at promoting physical wellness through active and healthy lifestyles”.

So taking a holistic look, while FITS focuses more strictly on fitness, BFIT more broadly focuses on wellness of which fitness is one aspect in addition to (as defined in the same infographic as above) Happiness, Treatments, and Healthy Eating.  In other words, FITS could be viewed as a subset of BFIT.

(While not getting into details, some of these other themes are captured in other thematic offerings via Janus, such as ORG – The Organics ETF)

Outside of these sector and industry exposures, a couple other differences include:

• BFIT has a bit more Emerging Markets exposure than FITS (about 10%) from some exposure in China and Taiwan.
• As both ETFs have a Global mandate, they will have a degree of foreign currency risk. FITS has approximately 32% non-USD exposure while BFIT has approximately 49%.

Regardless of the difference, both ETFs offer a mechanism to get exposure to what I think is an intriguing theme in the marketplace as fitness and wellness continue to have an important (and seemingly increased) focus in people’s lives.

Clayton Fresk is a Portfolio Manager at Stadion Money Management, a participant in the ETF Strategist Channel.

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