Cathay launches ‘medical revolution’ ETF on TWSE

Nov 22nd, 2021 | By | Category: Equities

Cathay Securities has launched a new thematic equity ETF in Taiwan providing exposure to innovative healthcare companies worldwide.

Cathay launches global ‘Medical Revolution’ ETF on TWSE

The fund provides exposure to innovative healthcare companies listed in developed markets globally.

The Cathay Global Genomics Immunology and Medical Revolution ETF (00898 TT) has been listed on Taiwan Stock Exchange and has come to market with approximately $130 million in assets.

The fund is linked to the Solactive Global Genomics Immunology and Medical Revolution Index which targets three areas of healthcare innovation including vaccine breakthroughs, gene technology, and regenerative medicine.

The index selects its constituents from a universe of developed market stocks, including those listed in South Korea and Taiwan, which have market capitalizations above $1.5 billion and average daily trading volumes greater than $25m.

The methodology first utilizes FactSet’s Revere Business Industry Classification System (RBICS) to screen for companies operating within the following healthcare industries: pharmaceuticals, biotechnology, medical specialties, managed health care, hospital & nursing management, medical & nursing services, and healthcare services.

Security selection is then driven by Solactive’s proprietary natural language processing algorithm, called ARTIS, which identifies firms linked to a specific theme by screening publicly available information such as financial news, business profiles, and company publications for appropriate keywords.

With reference to the target theme, the algorithm is programmed to identify companies with business operations linked to the development and manufacture of vaccines; the treatment of infectious diseases; genomic sequencing, diagnostics, and editing; the development of gene-based therapies; the research of genetic variations; and the treatment of cancer and related complications.

The index targets 50 stocks with the highest ARTIS thematic relevance scores. Constituents are initially equally weighted and then adjusted to increase the weight of stocks with higher thematic relevance scores.

Reconstitution and rebalancing occur semi-annually with buffer rules helping to limit unnecessary turnover.

As of 19 November, over three quarters (75.8%) of the index weight was allocated to stocks listed in the US with the next-largest country exposures being Switzerland (7.5%), Germany (4.1%), and the Netherlands (3.0%). Notable positions included Intellia Therapeutics (5.1%), Moderna (4.5%), BioNTech (4.1%), Pfizer (3.5%), and Novavax (3.1%).

The fund comes with a management fee of 0.85% and a custodian fee of 0.20%

Eddie Cheng, Head of Quantitative and Index Business Division at Cathay Securities, commented: “In the past two years, we’ve seen the importance of medical investment, and we believe health is the biggest wealth for everyone. Thus, we are honoured to partner with Solactive to bring the Cathay Genomics Immunology and Medical Revolution ETF to the Taiwan market and provide investors with an indispensable vehicle to their portfolio that invests in companies with revolutionary medical technologies.”

Timo Pfeifer, Chief Markets Officer at Solactive, added: “The pandemic has put global medical sectors into the spotlight, and many pharmaceutical revolutions originated in the previous 18 months with genomics technology and personalized medicine being part of a much broader and auspicious trend. With major player Cathay, we are very honoured to expand our APAC footprint to Taiwan, and we are looking forward to establishing a longstanding business relationship with them, developing more innovative products together in the future.”

Cathay offers a further four thematic equity ETFs targeting companies aligned with the investment themes of semiconductors, cybersecurity, 5G technology, and autonomous & electric vehicles.

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