Global X debuted a new fund on Tuesday that’s among the first ETFs to explicitly track the genomics market with targeted, pure play exposure.
The Global X Genomics & Biotechnology ETF (Nasdaq: GNOM) becomes Global X’s 13th fund in its Thematic Growth suite. The new ETF stands to benefit from advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology.
Jay Jacobs, head of research and strategy at Global X, said the future growth potential of genomic companies is tremendous.
“The rapidly falling cost of genomic sequencing has made genetic testing and data collection much more widely accessible,” Jacobs said. “Scientists and health care practitioners have new opportunities to leverage insights from genetic data to develop innovative treatment solutions to tens of thousands of diseases previously deemed incurable.”
He said the rise of artificial intelligence and big data processing tools should only complement these efforts.
“The potential to treat such illnesses, combined with the rise of precision or personalized medicine, which relies on patients’ unique genetic information to guide treatment decisions, is expected to drive long-term growth of the genomics industry,” he said.
GNOM invests in companies involved in genomic sequencing; computational genomics and genetic diagnostics; development and testing of genetic medicines and therapies; gene editing; and/or biotechnology. Companies are only eligible for inclusion if they generate at least 50% of their revenues from genomics related business operations. The index is market cap weighted with a single security cap of 4.0% and floor of 0.3%.
Jacobs said the passive investing strategy and market-cap weighted scheme position it to best capture industry dynamics, such as the rise of dominant players and industry consolidation.
“Further, the index is not constrained by geography or limited to the US, allowing the fund to capture growth of the genomics market globally over the long-term,” Jacobs said. “Although the US is currently the leader in genomics innovation, we expect other significant players to emerge internationally.”
GNOM’s launch comes at a time when 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%.i 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.ii
“The wide-ranging and transformative health benefits from advancements in genomic technologies are astounding,” said Michael Hoffmann, research analyst at Global X. “We’re eager to see how investors engage with GNOM as a tool for accessing this disruptive theme.”
Breakthroughs in genomic science can present new treatments to help patients recover from what were once believed to be incurable afflictions. Scientists have identified more than 50,000 genetic diseases caused by single-gene mutations, many of which are likely to be treated through genomic approaches, including several methods that have already begun to receive FDA approval.iii
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i. Allied Market Research, “DNA Sequencing Market: Opportunities and Forecasts, 2018-2025,” Dec 2018.
ii. Elysium Health, “The Non-Scientist’s Guide to Genetic Testing,” May 22, 2018.
iii. WIRED, “Gene Editing is Trickier Than Expected—but Fixes Are in Sight,” Feb 28, 2019.