Bringing you live news and features since 2006 

ALPS Medical Breakthroughs ETF aims to capitalise on new era for drugs companies

RELATED TOPICS​

ALPS has launched the ALPS Medical Breakthroughs ETF, the first exchange-traded fund built specifically to capture R&D opportunities in the biotechnology and pharmaceutical industries.

The fund has been designed to track the performance the Poliwogg Medical Breakthroughs Index SM (PMBI), a modified cap-weighted index consisting of small-cap and mid-cap pharmaceutical and biotechnology stocks listed on US stock exchanges that have one or more drugs in either Phase II or Phase III US FDA clinical trials.

Unlike the widely-followed NASDAQ Biotechnology Index, Poliwogg Medical Breakthroughs Index SM is tilted to small- and mid-cap firms where a larger portion of investors’ dollars are spent on R&D.

According to Michael Akins, Senior Vice President, Portfolio Manager for the ALPS ETF Trust, the Fund is coming along as the era of blockbuster drugs draws to a close – the so-called “patent cliff.”

“Many of the blockbuster drugs from the 1990s and 2000s have lost patent protections over the past few years,” says Akins, “and Big Pharma is scrambling to fill its pipelines. Given the lengthy process and high rate of failure for new drug development, it makes sense for the established companies to look toward new therapies being developed by smaller innovative firms.”

The S-Network Global Indexes, Inc. whose innovative financial services platform provides investment access to healthcare and life sciences companies, has constructed the PMBI to best capture research and development opportunities in the pharmaceutical industry. The 75 stocks that comprise the Index represent companies where a larger portion of investors’ dollars are spent on R&D compared to their larger counterparts.

Based on current PMBI constituents, the earlier-stage firms in the Poliwogg Medical Breakthroughs Index SM spent an amount equal to 2.7% of market cap on Research & Development, 29% more than did firms in the NASDAQ Biotech index. At the same time, firms in the PMBI spent an amount equal to 2.0% on non-R&D operating expenses compared to 2.6% for the more established firms.

Historically, the biotechnology space, given its high failure rate, its non-traditional metrics, its need for specialised knowledge, and its extreme volatility, has been a particularly difficult industry for stock pickers . According to Tom Carter*, President of ALPS Advisors, the Fund’s passive index-based approach will be appealing to investors and advisors.

“We know that biotech is a tough environment for stock pickers,” says Carter, “but we also know that it represents real investment opportunity. We believe the ALPS Medical Breakthroughs ETF offers an unprecedented way for smart advisors to build better portfolios.”

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by