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Fighting Obesity Using ETFs

Weight loss has long been a challenge for many people, me included. Indeed, there are an estimated 1 billion individuals living with obesity, and the Obesity World Atlas estimates this could rise to 1.9 billion by 2035. Not only is this harmful to the health of our fellow citizens but there’s a sizable cost to the global economy. Obesity is unfortunately linked to heart disease and diabetes. 

However, according to Novo Nordisk, less than 2% of obesity cases are treated by weight loss drugs. Most cases are untreated.  

The good news is that there are a growing number of companies that have demonstrated that their medications can help treat diabetes and even help with weight loss. You likely have seen commercials for Ozempic (from Novo Nordisk) or Zepbound (from Eli Lilly) on TV. So have investors, as these companies’ stock prices have risen notably in 2024.  

Rapid Industry Growth 

According to Goldman Sachs, the anti-obesity drug market could rise to $100 billion by 2030. They estimate that about 15 million adults in the US alone may be treated with AOMs (anti-obesity medications) by 2030, representing an approximately 13% penetration of the eligible US obese/overweight adult population. Other factors likely to drive sales include rates of insurance reimbursement, the duration of use among patients, and drug pricing. 

Eli Lilly and Novo Nordisk are the most well-known companies tied to this industry. However, they are not alone. The Tema Obesity & Cardiovascular ETF (HRTS), which launched in November 2023, owns 44 holdings. These currently also include next-generation companies like Amgen and Viking Therapeutics. HRTS has more than $60 million in assets. 

There are $84 billion in U.S. listed thematic ETFs. Many focus on disruptive technology themes like artificial intelligence, cloud computing, and robotics. HRTS is the first of these healthcare thematic ETFs that focuses on fighting obesity and related diseases. Based on regulatory filings, Amplify and Roundhill will soon launch other products. VettaFi is the index provider behind the pending Amplify product. 

The First ETF Takes an Active Thematic Approach 

HRTS’s manager, Dr. David Song, is a medical doctor and has 25 years of investment experience in biotechnology and health care. Given the rapid evolution of these trend and the likely emergence that new drugs make progress, investors may want to learn about an active approach.  

This week, VettaFi is hosting a webcast with Tema. On May 15, at 2pm ET we will dive deeper into this emerging investment trend. We will also discuss how a thematic health care strategy is different from the broad sector ETFs like the Health Care Select Sector SPDR (XLY) or even more targeted industry funds like the iShares Biotechnology ETF (IBB). Register today to learn more.  

 For more news, information, and analysis, visit Vettafi | ETF Trends.

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