Direxion has launched a new thematic equity ETF targeting biotechnology companies developing and applying messenger RNA (mRNA) technology.
The successful rollout of Covid-19 vaccines has elevated the profile of mRNA technology.
The Direxion mRNA ETF (MSGR US) has been listed on NYSE Arca with an expense ratio of 0.65%.
mRNA is a single-stranded ribonucleic acid molecule that is complementary to one of the DNA strands of a gene.
mRNA plays a vital role in protein synthesis in the human body, and mRNA technologies leverage this vital role to enable targeted cells to produce proteins that enable the body to fight or prevent a given disease.
The successful rollout of Covid-19 vaccines, which contain pieces of mRNA that help the body protect against infection, has greatly elevated the profile of mRNA technology in the public consciousness.
David Mazza, Head of Product at Direxion, said: “For years, mRNA technologies struggled to gain acceptance. The Covid-19 pandemic changed all of that, thanks to the highly effective vaccines developed using mRNA to combat the novel coronavirus and its emerging variants.
“MSGR captures companies specifically involved with mRNA technologies that are believed to be at the forefront of fighting the battle against Covid, while also highlighting mRNA’s application to other viruses and diseases including HIV and Lyme disease.”
Methodology
The fund is linked to the BITA Messenger RNA Technology Index which selects its constituents from a universe of equity securities, including depository receipts, listed in the US, Canada, and Europe. Eligible securities must have a market capitalization of at least $100 million and an average daily turnover greater than $1m.
The index includes companies that derive at least 50% of their revenue from products and therapies based on mRNA technology, as well as firms that do not meet the 50% revenue criteria but have a significant portfolio of clinical trials or patents based on mRNA technology.
Constituents are weighted by float-adjusted market capitalization, and the index is reconstituted and rebalanced on a quarterly basis.
As of the end of November, the index contained 24 constituents. Approximately three-quarters of its weight was allocated to US-listed stocks with the next-largest country exposures being Germany and China at 12% and 6%, respectively.
Notable positions included BioNTech (9.4%), Dicerna Pharmaceuticals (8.2%), Vertex Pharmaceuticals (7.1%), Moderna (7.0%), BeiGene (6.6%), Alnylam Pharmaceuticals (6.5%), and Gritstone bio (5.3%).