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ETFs to Consider on Pfizer's Vaccine Announcement

Sejuti Banerjea
·4 min read

Pfizer’s PFE vaccine announcement had the markets sizzling yesterday. The vaccine is 90% effective in immunizing against COVID. And that means we will be flying, travelling, eating out, visiting bars and stores and entertainment parks and what have you. It means that life will be normal again.

Tech stocks have led the way in the last few months with manufacturing also picking up, helped by stimulus money. But now, if there really is a vaccine this year, all these other sectors are also going to come around. It means that we can hope for a robust 2021.

Co-developed with Germany’s BioNTech BNTX, the vaccine candidate called BNT162b2 uses nucleoside-modified messenger RNA (modRNA) technology. This is different from conventional vaccines that introduce an infectious element into the body that creates the antibodies and trains them to fight the infection if and when it hits.

The messenger RNA (mRNA) technique uses cheaply and widely available resources like chicken eggs or other mammalian cells to quickly produce vaccines in a lab at scale. The need to store at sub-zero temperatures can ratchet up those costs however.

An RNA vaccine is a molecular sequence/template that contains information used by the cells to produce a certain kind of antigen. The body’s immune system can recognize these antigens, which can then be used to fight off the disease.

The announcement was about a Phase 3 trial that started in July and went off very well with 90% of the 43,538 participants from diverse backgrounds having received the second dose by Nov 8. The two-dose vaccine has to be taken three weeks apart with immunity coming seven days after the second dose (which would be 28 days after the first dose).

By late November, the companies will have the two months of safety data necessary to qualify for the FDA’s Emergency Use Authorization. They expect to produce up to 50 million vaccine doses globally in 2020 and up to 1.3 billion doses in 2021.

Given the above, Pfizer or the following ETFs with significant exposure to it are beginning to look good-

First Trust Morningstar Dividend Leaders (FDL)

With AUM of $1.286 billion, expense ratio of 0.45%, one-month average trading volume of 280,923 and Pfizer exposure of 7.36%, this ETF tops the list. Its dividend yields 4.91%.

First Trust Nasdaq Pharmaceuticals ETF (FTXH)

With AUM of $19.8 million, expense ratio of 0.60%, one-month average trading volume of 9,173 and Pfizer exposure of 7.81%, this is a close second. Its dividend yields 0.77%.

WisdomTree US High Dividend Fund (DHS)

Third on the list is DHS with its AUM of $706.3 million, expense ratio of 0.38%, one-month average trading volume of 60,732 and Pfizer exposure of 5.76%. Its dividend yields 4.30%.

iShares Core High Dividend ETF (HDV)

Next, we have HDV, with its AUM of $5.326 billion, expense ratio of 0.08%, one-month average trading volume of 494,955 and Pfizer exposure of 5.50%. Its dividend yields 4.25%.

iShares Evolved U.S. Innovative Healthcare ETF (IEIH)

Rounding off the list is IEIH, with its AUM of $26.4 million, expense ratio of 0.18%, one-month average trading volume of 6,841 and Pfizer exposure of 4.97%. Its dividend yields 1.18%.

Wrapping Up

If a vaccine becomes more easily available, it may have an impact on the amount of stimulus from the government. The go-slow at the government level may even have been deliberate while the trial results were awaited.

However, this is the real good news. Propping up the economy with a stimulus is after all a temporary measure. It has been exactly what was needed to get the economy out of the trough. But what we really always needed was a vaccine.   

 

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