Investors exit Medical Innovation ETFs

Investors pull the plug on Tomorrow’s treatments ETFs

Tomorrow’s treatments ETFs have witnessed outflows of -$255 million this year as investors avoid high growth high-risk sectors amid looming interest rate hikes. “Tomorrow’s treatments” is an investment theme that focuses on ETFs investing in companies engaged in research and development of cutting-edge treatment, therapy, and drugs to treat common and rare diseases. Last year, investors added $650 million to the theme as innovative COVID-19 vaccines emerged in record time and opened the doors for the funding and development of new treatments. Scientists have already begun exploring the mRNA technology used in Pfizer-BioNTech and Moderna vaccines to create new vaccines and treatments of various diseases such as cancer.

Investing in America-domiciled Tomorrow’s Treatments ETFs

While tomorrow’s treatments have recently gone out of favor, the name of the theme hints at the long-term prospects the investment holds. Investors in America can jump on board the theme through Robo Global Healthcare Technology and Innovation ETF (HTEC), ALPS Medical Breakthroughs ETF (SBIO), and ETFMG Treatments Testing and Advancements ETF (GERM) among others.

The largest of the pack is HTEC with $172 million in assets under management. The fund tracks the ROBO Global Healthcare Technology and Innovation Index and invests in companies engaged in developing breakthrough healthcare technologies vital for tomorrow’s treatments. As of February 17th, 2021, the fund’s top holdings include Vocera Communications (VCRA, 2.12%), Glaukos Corp. (GKOS, 2.06%), iRythm Technologies (IRTC, 1.84%), Boston Scientific Corp. (BSX, 1.73%), and Integra LifeSciences Holding (IART, 1.67%).

HTEC has a net expense ratio of 0.68% and trades on the New York Stock Exchange. Since its inception on June 25th, 2019, the fund has generated a cumulative return of +18% (as of January 31st, 2022). Meanwhile, HTEC has lost around -20% this year.