‘BioThreat’ ETF on the way amid coronavirus pandemic turmoil

Developing new drugs isn’t easy, and making bets in biotech comes with the risk of failure. Yet, the potential payoff for investors can also be enormous when a new medicine succeeds.
Developing new drugs isn’t easy, and making bets in biotech comes with the risk of failure. Yet, the potential payoff for investors can also be enormous when a new medicine succeeds.
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As the coronavirus pandemic rattles the globe, companies that focus on protection or recovery from biological threats could become part of an ETF.

Pacer ETFs is planning to launch a fund that tracks an index of companies offering products, technologies and services that are currently in high demand. Those stocks range from businesses that could identify or combat diseases to those enabling social distancing and working from home, according to a filing to the SEC.

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With millions of people around the world stuck in their home offices to help contain the coronavirus outbreak, companies that specialize in remote-working products are becoming a hot spot. And while biotechnology shares haven’t been immune to the huge volatility, they’ve been withstanding it better than the broader market. Developing new drugs isn’t easy, and making bets in biotech comes with the risk of failure. Yet, the potential payoff for investors can also be enormous when a new medicine succeeds.

“There is likely to be demand for a thematic diversified strategy seeking to combat biotechnology threats as COVID-19 has reshaped global economies,” said Todd Rosenbluth, the New York-based head of ETF and mutual fund research at CFRA. “However, many of these likely constituents will be in early stages of growth and profitability, while perhaps also trading at a premium due to investor optimism.”

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The holdings in these top-performers “are companies that will be replaced, from a performance standpoint, over the next decade,” an expert says.

Pacer plans to track the performance of the BioShares BioThreat Index, seeking to include companies with at least $1 billion in market capitalization and a minimum average daily value traded of at least $2 million for the last six months.

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