For healthcare investors in 2020, the genomics space has been the place to be, that is if they’ve been utilizing the ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG).
Year-to-date, ARKG is higher by 15%, or better than triple the performance of the Nasdaq Biotechnology Index. Likewise, ARKG is trouncing the S&P 500 Health Care Index, a collection of large-cap names from the sector.
While ARKG is getting plenty of praise and deservedly so as a coronavirus play, the genomics investment thesis isn’t confined to a single, albeit extraordinary scenario.
“The global genomics market was worth $851.96 million in 2019. It is expected to grow at a compound annual growth rate (CAGR) of 14.71% and reach $1,475.11 million by 2023,” according to a recent report from Research and Markets.
Government And Genomics
While all of ARKG’s components are private enterprises, government spending is a potentially important catalyst for the genomics thesis.
“Rising government funds for research on genomics drives the growth of the single-cell genomics market,” notes Research and Markets. “The government funding focuses on efforts to resolve the complexity of the human genome, the genomic basis of human health and disease, and ensure that genomics is used safely to enhance patient care and benefit society through government, public and private institutions.”
ARKG includes companies that merge healthcare with technology and capitalize on the revolution in genomic sequencing. These companies try to better understand how biological information is collected, processed, and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals and enhancing our quality of life.
Importantly, ARKG is a credible long-term investment. Over the past three years, the fund is up nearly 105% or more than triple the returns of the Nasdaq Biotechnology Index over the same span. During that period, the ARK fund more than doubled the aforementioned S&P 500 Health Care Index. Still, there are other issues to consider.
“The technology limitation in single-cell genomics hinders the growth of the single-cell genomics market,” according to Research and Markets. “Due to cost and technical constraints, the use of genetic sequencing to better target and treat rare and chronic diseases was largely out of reach for most health care organizations.”
However, data confirm the genomics sequencing market is booming as costs are in fact declining. The DNA sequencing market is experiencing significant growth, with estimates expecting the market to grow from $6.2 billion in 2017 to $25.5 billion by 2025 – representing a compound annual growth rate of 19%. As a result of significant technological advances in the field, it’s estimated that anyone with $100 can now sequence their DNA, down from the $100 million it was estimated to cost in 2001.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.