BetaShares launches global healthcare and agriculture ETFs

Aug 12th, 2016 | By | Category: Equities

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Australian exchange-traded fund provider BetaShares has launched two ETFs with exposure to the global healthcare and agriculture industries. The BetaShares Global Healthcare ETF – Currency Hedged (ASX: DRUG) and the BetaShares Global Agriculture Companies ETF – Currency Hedged (ASX: FOOD) provide local investors with a means of access to significant global sectors expected to grow significantly over the long term. Each portfolio uses a currency hedging overlay, mitigating the risk of adverse movements between the Australian dollar and the portfolios’ currency exposures.

BetaShares launch equity sector ETFs targeting global healthcare and agriculture stocks

Alex Vynokur managing director of BetaShares.

The BetaShares Global Healthcare ETF tracks the Nasdaq Global ex-Australia Healthcare Hedged AUD Index, a reference for the performance of the 60 largest global healthcare companies by market capitalisation (excluding companies in Australia).

Alex Vynokur, managing director of BetaShares, said in a statement: “Spending on healthcare has increased strongly across the globe in recent decades, driven by rising living standards, population ageing and improvements in innovation and technology… Through DRUG, investors can tap into the growth potential of this sector and obtain diversified exposure across the dynamic global healthcare industry.”

An ageing population, improvements in innovations and technology, and rising living standards (which increases the number of people able to afford ‘luxury’ goods such as healthcare provisions) are driving growth in the sector. According to OECD estimates, in the United States alone total (public and private) healthcare spending increased from 6.2% of GDP in 1970 to 16.9% by 2015. The BetaShares Global Healthcare ETF provides a means of access to this rapidly growing industry for investors who believe these trends are likely to continue.

As of 30 June 2016 the fund’s index has significant exposure to the United States (59.4%), Switzerland (14.2%), Japan (6.8%), Britain (6.1%) and Ireland (4.0%). The largest constituents are Johnson & Johnson (8.4%), Novartis (7.1%), Roche Holding (5.8%), Merck & Co (4.9%) and UnitedHealth Group (3.9%).

The fund has an estimated total expense ratio (TER) of 0.57%.

The BetaShares Global Agriculture Companies ETF offers diversified exposure to the world’s 50 largest agriculture companies outside of Australia through tracking the Nasdaq Global ex-Australia Agriculture Companies Hedged AUD Index.

“As the world grows in size, today’s existing large agricultural firms appear well placed to benefit from the growing global demand for food,” said Vynokur. “Through FOOD, investors can use a single investment to gain diversified exposure to global agricultural power houses. By investing in the company, and not the commodity, investors also have the potential to generate positive returns even when food prices remain stable.”

BetaShares notes that due to the necessity of people to eat, demand for agricultural products is a certainty. Furthermore, the increasing population growth rate of the world combined with expected rises in living standards (historically proven to be highly correlated with per capita consumption of agricultural products) bodes well for the success of the sector.

As of 30 June 2016 the fund’s index has significant exposure to the US (47.0%), Japan (9.6%), Canada (9.5%), Britain (8.5%) and Norway (4.9%). The largest sector allocations are to packaged foods & meat (30.7%), fertilizers & agricultural chemicals (24.5%), agricultural products (19.7%), and agricultural & farm machinery (13.1%). The largest single constituents are Monsanto (7.6%), Archer-Daniels-Midland (7.1%), Deere & Co (6.8%), Tyson Foods (6.1%) and Kubota (5.4%).

The fund has an estimated TER of 0.57%.

The two products are part of BetaShare’s Global Sector Series – a suite of ETFs designed to provide Australian investors with exposure to some of the world’s most important industry sectors.

Three ETFs from this series have already been launched:
BetaShares Global Energy Companies ETF – Currency Hedged (ASX: FUEL)
BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS)
BetaShares Global Banks ETF – Currency Hedged (ASX: BNKS)

“The five ETFs that form part of the BetaShares Global Sector ETF family can enable Australian investors to further evolve their existing portfolios by obtaining access to globally significant industry sectors in a convenient and cost effective way. These funds now comprise, what we believe to be, the most comprehensive range of global sector funds available on the ASX,” said Vynokur.

UK investors have a few ETFs available to them that invest in globally-listed equities in either the healthcare or agricultural sectors.

The iShares Agribusiness UCITS ETF (LSE: ISAG) tracks the S&P Commodity Producers Agribusiness Index. The fund has assets under management (AUM) OF $56m and a TER of 0.55%.

The PowerShares Global Agriculture UCITS ETF (LSE: PSGA) tracks the NASDAQ OMX Global Agriculture Notional Net Total Return Index. The fund has a TER of 0.75%.

The Lyxor MSCI World Health Care TR UCITS ETF (LSE: HLTW) tracks the MSCI Daily TR World Net Health Care USD Index. The fund has AUM of $266m and a TER of 0.40%.

The SPDR MSCI World Health Care UCITS ETF (LSE: WHEA) tracks the MSCI World Health Care Index. The fund has AUM of $44m and a TER of 0.30%.

The db X-trackers MSCI World Health Care Index UCITS ETF (LSE: XDWH) also tracks the MSCI World Health Care Index. The fund has $189m in AUM and a TER of 0.45%.

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