There could also be a stronger case to take a position in single stocks over exchange-traded funds in the load loss space.
Amplify ETFs and Roundhill Investments each filed a prospectus last week to launch funds focused on weight reduction firms, a move that Strategas ETF and technical strategist Todd Sohn believes hinges on the performance of two dominant stocks: Novo Nordisk (NVO) and Eli Lilly (LLY).
“The important holdings are going to be Lilly and Novo Nordisk, and doubtless one or two other big names … together with a number of the manufacturers down the provision chain,” he told CNBC’s “ETF Edge” this week. “Ultimately, it’s as much as those big behemoths which can be playing those drugs.”
With just two players currently on the forefront of the U.S. obesity drug market, ProShares’ Simeon Hyman questions the relevance of weight reduction ETFs for investors seeking to buy into the industry.
“I feel that is considered one of the challenges at any time when you see an innovation like this,” the firm’s global investment strategist said in the identical interview. “If the advantages are going to incumbents, then possibly there’s not a theme per se that should be exploited.”
Strategas’ Sohn also suggested that ETFs based on themes, slightly than sectors or indices, is likely to be falling out of favor with investors.
“I feel thematics are a bit of bit on the backburner at once, especially the way in which they performed the last couple of years. I feel there’s room for them, but multiple, it’s gonna be tough,” he said.
To this point in 2024, Novo Nordisk has gained 29% and Eli Lilly is up 30%, as of Wednesday’s close. The broader Health Care Select Sector SPDR (XLV) is 7% higher in the course of the same period.
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