HTEC will track what is, in effect, an actively managed index. The index will be based on in-house research into promising global small and mid cap healthcare technology companies. The index will look at how much money companies are making and to what degree they are leading health tech innovation, and score them accordingly. Companies will be weighted by how high they score.
The index will hold between 50 – 100 companies, the prospectus says.
HTEC charges 0.80% a year.
Analysis – what about HEAL and IMED?
HTEC isn’t the first fund to target healthcare innovation. iShares has a $485M healthcare innovation ETF in Europe, which tracks an index that uses FactSet research: the iShares Healthcare Innovation UCITS ETF (HEAL).
Going through the portfolio composition files of HEAL and HTEC, it’s interesting to see just how different they are. Of the 84 companies HTEC’s creation basket, only 18 of them are also in the creation basket for HEAL. With so much difference, it will be interesting to see which performs better. And interesting to see, too, which research team is more able to pick winners: FactSet or Robo Global.
The other question for me with today’s listing is what happened to the PureFunds ETFx HealthTech ETF (IMED)?
IMED was a plucky health tech ETF that got started in 2016, but got liquidated 12 months later. On the surface, IMED and HTEC have a fair bit in common. They track the same theme. They were both built as partnerships between index providers and white labellers. (ETF Managers Group in IMED’s case). They were both US domiciled. They charged similar fees.
Yet IMED closed after a short while due to lack of assets. It will also be interesting to see if HTEC can really make this theme work.