XShares Advisors, which provides the HealthShares line of biotech ETFs, plans to market an Asian Biotech ETF in the near future. The Asian ETF is one of six funds that XShares has currently in development. Two of the others are European biotech funds.
XShares already offers a portfolio of biotech ETFs that target specific therapeutic areas. Because of their narrow focus, the ETFs have received a fair share of negative publicity. Analysts wonder if investors will find the funds serve any need (see story).
In early March, XShares launched nine funds including:
HealthShares Autoimmune-Inflammation ETF (HHA)
HealthShares Cancer ETF (HHK)
HealthShares Cardiology ETF (HRD)
HealthShares GI/Gender Health ETF (HHU)
HealthShares Metabolic-Endocrine Disorders ETF (HHM)
HealthShares Neuroscience ETF (HHN)
HealthShares Ophthalmology ETF (HHZ)
HealthShares Respiratory/Pulmonary ETF (HHR)
HealthShares Composite ETF (HHQ)
Each fund includes 22-25 companies (except for the Composite, which includes 80 biotechs) that are selected using a proprietary quantitative methodology. Each company is given a more or less equal weighting, and the portfolio is rebalanced to keep any one company from assuming a disproportionate share of the assets. But XShares allows some leeway in the weighting, so that a company experiencing a run is given some room, rather than being cut back.
The nine funds that began trading in March join another 6 funds that began trading in January:
HealthShares Cardio Devices ETF (HHE)
HealthShares Diagnostics ETF (HHD)
HealthShares Emerging Cancer ETF (HHJ)
HealthShares Enabling Technologies ETF (HHV)
HealthShares Patient Care Services ETF (HHB)
In other ETF news, First Trust is now offering the AMEX Biotechnology Index Fund (NYSEARCA:FBT), which is meant to track the AMEX Biotechnology Index. Like the Index, the fund contains 20 biotech companies on an equal weighting basis. The fund (again, just as the Index) is rebalanced every quarter, so the weightings never get very far out of line.
The components of the AMEX Biotech Index include most of the larger capitalization biotech stocks: Affymetrix (NASDAQ:AFFX), Gilead (NASDAQ:GILD), ImClone (OTCPK:IMCL), Millipore (MIL), Invitrogen (IVGN), Celgene (NASDAQ:CELG), Applera-Celera Genomics (NASDAQ:CRA), Medimmune (MEDI), Millennium (MLNM), Amylin (AMLN), Genentech (Private:DNA), Cephalon (NASDAQ:CEPH), PDL BioPharma (NASDAQ:PDLI), Human Genome Sciences (HGSI), Biogen Idec (NASDAQ:BIIB), Nektar (NASDAQ:NKTR), Amgen (NASDAQ:AMGN), Vertex (NASDAQ:VRTX) and InterMune (NASDAQ:ITMN).
These funds join other biotech ETFs, which we have covered previously (see Biotech Exchange Traded Funds).
Disclosure: Centient management holds a position in Genentech shares and does consulting work for Genentech.