Genomics represents one of the most disruptive, opportunity-rich investment frontiers, but stock picking in this space is tricky, to say the least.
That underscores the utility of various genomics-dedicated exchange traded funds, including the WisdomTree BioRevolution Fund (WDNA). WDNA, which debuted earlier this year, tracks the WisdomTree BioRevolution Index (WTDNA).
WDNA offers investors a broad, efficient avenue for tapping into what’s an increasingly sprawling investment thesis. However, while genomics companies are working on various therapies and treatments, all it takes is one blockbuster to renew investors in the group. Improving Type 1 diabetes treatment could prove to be an example.
“Absent a set of reasonable possibilities for a large set of type 1 diabetes patients; scientists could turn to the possibilities of genetic research. In this case, the goal would be to somehow introduce insulin-producing cells into a patient, and to have those cells be genetically similar enough to that patient such that the patient’s immune system wouldn’t kill them,” notes Christopher Gannatti, WisdomTree global head of research.
The Benefit Of Its Weight
WDNA doesn’t allocate any more than 1.88% of its weight to any of its 111 holdings. That might sound like a detriment, but it’s a benefit because genetics research efforts can take years to bear fruit and, in the worst case, go awry, punishing equity prices in the process.
As just one example, one mentioned by Gannatti, Vertex Pharmaceuticals (NASDAQ: VRTX) is researching genetic implications in Type 1 diabetes, and “while initial results of the clinical trial appear to show some promise, it is important to note that there must be further study and testing to indicate if this approach is truly safe and effective.”
Looked at differently, it’s tempting to stock pick among genomics stocks because all of these companies are working on something that could improve quality of life. However, not all are successful, and investors’ chances of picking a dud in this space are as good if not better than choosing the next big thing in the biotechnology space. WDNA dramatically eases that burden while still offering investors significant upside potential.
“We believe WDNA is uniquely positioned to provide exposure to companies that are reading, understanding, writing, and editing DNA for applications within the health care vertical and across interdisciplinary fields like agriculture, food, materials, chemicals, and energy production,” concludes Gannatti.
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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.