The Global X Genomics & Biotechnology ETF (Nasdaq: GNOM) is just over four months old, and after slumping for a bit, the fund has surged more than 10% off its June lows as investors embrace new ways of accessing genomics investments.
GNOM tracks the Solactive Genomics Index and “seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology,” according to Global X.
When investors are looking for more aggressive rates of growth, biotech stocks typically represent some of the best opportunities for rapid appreciation. These companies spend a plethora of time and massive amounts of money to fund breakthrough biological treatments and diagnostic tools. Blossoming developments can literally change their fortunes, and the fortunes of shareholders overnight. Genomics is likely to be an integral part of the biotechnology growth story in the years ahead.
GNOM ETF Methodology
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%. The ETF provides exposure to CRISPR, gene editing and therapeutics companies. CRISPR, in particular, is an area to watch.
The CRISPR opportunity set is massive and potentially lucrative for investors, but ETFs such as GNOM are appealing because stock picking in this arena can be difficult for many non-professional investors.
“Researchers at the University of Nebraska Medical Center were able to eradicate HIV from mice for the first time ever,” according to a recent Global X research piece. “The researchers leveraged the gene editing CRISPR-Cas9 technology combined with LASER ART, a virus suppression method.”
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.
For more thematic investing ideas, visit our Thematic Investing Channel.