Global X unveils two thematic equity ETFs

May 16th, 2016 | By | Category: Equities

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New York-based exchange-traded funds provider Global X Funds has launched two new thematic ETFs that aim to take advantage of evolving global demographics. The Global X Longevity Thematic ETF (LNGR), and the Global X Health & Wellness Thematic ETF (BFIT) have both begun trading on the Nasdaq Exchange.

Global X unveils two thematic equity ETFs

Jay Jacobs, Director of Research at Global X.

The Global X Longevity Thematic ETF, through tracking the Indxx Global Longevity Thematic Index, invests in companies that are well positioned to serve the world’s growing senior citizen population. According to Global X, the world faces a structural demographic shift towards an ageing population. “From 2010 to 2050, the world’s population of people 65 and older is expected to grow 18 times faster than the population of children aged 15 and younger,” the firm noted. “In addition, many seniors have accumulated a lifetime of wealth, affording them higher degrees of purchasing power compared to other age demographics.”

Jay Jacobs, Director of Research at Global X, commented in a statement: “As the world’s population ages, certain companies are well-positioned to serve the unique needs of seniors. These companies can include pharmaceuticals focused on age-related ailments, medical device manufacturers, senior care facilities, and senior-focused health care service providers.”

As of 9 May 2016, the fund contained 100 holdings and the index was significantly weighted towards the US (70.0%), followed by Denmark (6.2%) and Ireland (3.9%). The index is primarily invested in the health care sector with health care equipment (36.0%), biotechnology (31.5%), health care REITs (11.4%) and health care services (8.5%) making up the top four industries. Although there is a clear concentration around the health care sector, Global X notes that the unconstrained nature of the ETF may result in industry and geographic distributions changing over time as the trend develops. The fund has a total expense ratio (TER) of 0.68%.

The Global X Health & Wellness Thematic ETF seeks to harness the effects of changing consumer lifestyles by investing in companies geared toward promoting physical activity and well-being. According to Global X, a major theme developing across all generations is the optimization of one’s holistic health to improve quality of life. As this trend continues, the shift in the global economy towards healthy alternatives presents investment opportunities.

“Consumers around the world are increasingly prioritizing living a healthier lifestyle and taking a more proactive approach to improving their wellbeing” added Jacobs. “We believe this lifestyle shift presents an opportunity for companies involved in the trillion dollar health and wellness industry, such as those providing healthy and organic food, athletic apparel, gyms and fitness equipment, and preventative healthcare.”

As of 9 May 2016, the fund’s underlying index, the Indxx Global Health & Wellness Thematic Index, is weighted towards the US (46.8%), Japan (13.9%), the Cayman Islands (8.5%), Taiwan (6.3%) and the UK (3.8%). The main industry exposures are to apparel, accessories & luxury (20.7%), packaged foods & meats (20.0%), footwear (15.0%), speciality stores (8.3%) and leisure products (6.8%). The fund has 64 holdings and a TER of 0.68%.

The ETFs are the tenth and eleventh offerings in Global X’s suite of thematic funds, and the second and third under its “People” category of funds – those that seek to capitalize on broad changes in demographics and consumer behaviour. Other categories of thematic ETFs that Global X have launched include “Technology”, “Resources” and “Values”.

Jacobs believes that by looking to evolving trends, thematic investing can find growth opportunities overlooked in more classic asset allocation approaches. “Thematic investing is a growth-oriented investment strategy that has long been available to institutional investors,” he said. “We’re excited to continue expanding our suite of thematic ETFs designed to benefit from some of the major changes impacting the global economy.”

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