A Deep Dive into the New Amplify Weight Loss Drug & Treatment ETF (THNR)

About THNR ETF

Unlike HRTS or OZEM, THNR will be passively managed. This means its managers will not be actively selecting stocks based on their own research. Instead, the ETF will track the VettaFi Weight Loss Drug & Treatment Index, a float-adjusted market-cap weighted benchmark.

To be eligible for inclusion in THNR's index, companies must meet two main criteria in addition to a minimum market cap requirement of $500 million:

1. Drug Manufacturer Classification: Companies must be classified as drug manufacturers, specifically those who produce GLP-1 agonist drugs or are in clinical trials for such drugs.
2. Enabler Classification: Companies must be classified as enablers, which includes those involved in the outsourced development and manufacturing of these drugs or those that support their production and distribution.

"Previously there was no pure play ETF exposure to this market segment," says Christian Magoon, CEO of Amplify ETFs. "Formerly the highest GLP-1 exposure ETF available (HRTS) combined its portfolio with cardio-related stocks which in fact may suffer as GLP-1 treatments actually have shown to reduce cardio-related risks," he says.

The weighting within the index is designed to emphasize manufacturers, allocating 70% to them, while the remaining 30% is allocated to enablers. Within each category, companies are market cap-weighted to ensure a balanced representation.

Expect quarterly rebalancing in March, June, September, and December. The ETF currently has an expense ratio of 0.59%, making it cheaper than HRTS, which charges 0.75%, but priced the same as OZEM.

THNR ETF Holdings

THNR's portfolio is designed to strike a balance between the high conviction of stock picking and the diversification of most ETFs. Currently, the ETF holds 20 stocks, offering significant global diversification.

While 51% of the holdings are from U.S. companies, there's also notable representation from Japan, Germany, Denmark, Switzerland, and the U.K., thanks to strong pharmaceutical industries in these developed nations.

The majority of industry exposure in THNR is naturally in biopharma, accounting for 77% of the portfolio. This is a consequence of the higher weight given to manufacturers. The remaining portfolio is invested in equipment and services and chemicals, reflecting the enablers' contribution to the index.

There is a strong focus on large-cap companies (those with a market cap of $10 billion or more), which make up 80% of the portfolio. This is due to the index's market cap-weighted methodology within each category, which also benefits liquidity.

"THNR is fairly concentrated with 20 holdings currently as it seeks to deliver pure play exposure to this market segment," Magoon explains. "Its top two holdings – Eli Lilly and Novo Nordisk - account for just over 30% of the portfolio."

Other top holdings U.S. investors may be familiar with include AstraZeneca, Amgen, Merck, Pfizer, and Thermo Fisher Scientific.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.