Efficient access to US biotechnology
ETFS S&P Biotech ETF (ASX Code: CURE) offers investors exposure to US biotechnology companies. These are companies are engaged in research, development, manufacturing and/or marketing of products based on genetic analysis and genetic engineering. Examples include the development of immunotherapy treatments and vaccines to treat human diseases.
CURE aims to provide investors with a return that (before fees and expenses) tracks the performance of the S&P Biotechnology Select Industry Index. CURE uses a full-replication strategy to track the index, meaning that it holds all of the shares that make up the index. It is equal weighted, meaning each holding makes up the same portion of the portfolio and therefore contributes equally to overall performance.
To be eligible for inclusion in the index, companies must be part of the Biotechnology sub-industry of the Health Care sector and meet minimum market capitalisation and liquidity requirements.
Why consider CURE?
Simple, low cost exposure to the biotechnology sub-industry.
While Australian investors can readily access biotechnology companies such as CSL Ltd, the US market plays a leading role in innovation in part due to the lucrative nature of the US patent system.
An investment in a broad biotechnology portfolio provides exposure not only to medical advances, but also to potential corporate activity in the sector.
Liquid and transparent.
What is biotechnology?
Biotechnology includes companies primarily engaged in the research, development, manufacturing and/or marketing of products based on genetic analysis and genetic engineering. It includes companies specialising in protein-based therapeutics to treat human diseases. It excludes companies manufacturing products using biotechnology but without a health care application. Biotechnology is a sub-industry of the Health Care sector.
How does biotechnology differ from healthcare?
Biotechnology is a sub-industry within the Health Care sector.
The Health Care sector refers to all those industries involved in providing goods and services to manage the health needs of individuals and populations. There are two main groupings within the healthcare sector according to the Global Industry Classification Standards (GICS) including:
Healthcare Equipment and Services
Pharmaceuticals, Biotechnology and Life Sciences.
How are companies in CURE weighted?
Companies in CURE are equally weighted, meaning each holding makes up the same portion of the portfolio at each quarterly rebalance and therefore contributes equally to overall performance.
The choice of an equal weighting scheme provides investors exposure to the overall sector and allows all stocks to contribute equally to returns. Large-cap stocks do not dominate as they do where holdings are weighted by market capitalisation.
Why use an ETF for biotechnology exposure?
While biotechnology can be a lucrative space, it can also be high risk. The drug development process is very lengthy with high failure rates and it is an area that is sensitive to government policy. Using an ETF like CURE not only spreads the risk over many biotechnology companies but reduces single stock risk further by using an equal weight method.
CURE enables investors to access the growth in the US biotechnology sector, without having to pick individual winners.
How can you use CURE in a portfolio?
CURE can be used as a core exposure to the global healthcare sector and can aid portfolio sector diversification via investment in a sector that is underrepresented in the Australian market.
CURE may also be used as a tool for expressing long-term strategic or short-term tactical views on the biotechnology sub-industry.
For those using a core-satellite investment approach, CURE can be used as either a core or satellite holding.
|Date (NAV)||27 Nov 2020|
|Fund inception date||08 Nov 2018|
|Management Costs (% p.a.)||0.45|
|Maximum cost recoveries (% p.a.)||0.00|
|Legal Form||Managed Investment Scheme|
|Bloomberg Code||CURE AU Equity|
|Trading hours||10:00AM – 4:00PM|
|Issuer||ETFS Management (AUS) Limited|
|Custodian||JPMorgan Chase Bank N.A. (Sydney Branch)|
|Registrar||Computershare Investor Services (Jersey) Ltd|
|Benchmark||S&P Biotechnology Select Industry Index|
|Announcement date||24 Jun 2020|
|Ex-date||30 Jun 2020|
|Record date||1 Jul 2020|
|Payment date||15 Jul 2020|
|Distribution per unit |
|12-month franking level||0.00%|