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VIRS Makes Pandemic, Vaccine ETF Competition More Interesting

VIRS Makes Pandemic, Vaccine ETF Competition More Interesting

It was just a week ago that the first exchange-traded fund dedicated to vaccine developers, plenty engaged in the fight against the coronavirus, came to market. Now, that fund has company.

What Happened: The Pacer BioThreat Strategy ETF (NYSE:VIRS) debuted Thursday as the latest addition to the beat-the-coronavirus-ETF fray.

VIRS “seeks to offer investors exposure to companies that, in their normal operations, provide their goods and services to the market when a biothreat is present, such as a pandemic, through one of the following themes: Research of Current and Future Pandemics, Combatting Biological Warfare, Biological Threat Detection, Homeland Security, Disaster Relief Supply Storage, Food and Water Safety and Security, and Work and Live from Home Technology,” according to Pacer ETFs.

Why It's Important: VIRS will compete with the ETFMG Treatments, Testing and Advancements ETF (NYSE: GERM). Proving investors are clamoring for COVID-19 health care fund ideas, GERM is off to a fast start with $10.70 million in assets under management after just a week on the market.

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Clearly, both VIRS and GERM are appropriately tickered, but the new ETFs aren't identical twins. GERM is focused on vaccine producers and testing and diagnostics providers. As noted above, Pacers VIRS has a broader reach, dipping into segments such as biological warfare defense, food and water safety and the work from home them.

VIRS debuts with 45 holdings, which must have a minimum market value of $1 billion to be included in the new fund. Pacer monitors developments on the biological threat front monthly and can make changes on that schedule if need be, but the fund's underlying index is normally rebalanced on a semi-annual basis. VIRS member firms are capped at weights of 4.9%.

What's Next: Proving its mettle as a diverse coronavirus idea, VIRS's top three holdings – Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN) and Netflix (NASDAQ: NFLX) – are more work from, streaming entertainment and playing video games ideas than they are vaccine development or testing ideas.

While the new ETF allocates almost half its weight to the health care sector, just two of the fund's top 10 holdings – Sanofi (NYSE: SNY) and Johnson & Johnson (NYSE: JNJ) – are actively engaged in COVID-19 vaccine development. However, famed coronavirus vaccine stocks Gilead (NASDAQ: GILD) and Moderna (NASDAQ: MRNA) are on the VIRS roster.

In addition to the hefty health care weight, VIRS has a combined allocation of 38% to the consumer staples, consumer discretionary and technology sectors.

The new ETF charges 0.70% per year, or $70 on a $10,000 investment.


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