Since the completion of the National Institutes of Health and Department of Energy-funded Human Genome Project in 2003, genomics has been one of the most compelling areas of the biotechnology universe.
Genomics investing is now more accessible thanks to Tuesday's debut of the Global X Genomics & Biotechnology ETF (NASDAQ: GNOM).
GNOM targets the Solactive Genomics Index and aim of the new ETF is to “invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology,” according to Global X.
GNOM's underlying index is home to 40 stocks and the benchmark's top 10 holdings each command weights of 4 percent. The new ETF's lineup includes names familiar to biotechnology investors, such as Vertex Pharmaceuticals, Inc. (NASDAQ: VRTX), Illumina, Inc. (NASDAQ: ILMN) and BioMarin Pharmaceutical Inc. (NASDAQ: BMRN).
Why It's Important
Wide-ranging applications for genomics bolster the case for GNOM. Doctors, researchers and scientists use genomics in endeavors such as gene editing and sequencing, computational genomics, development of genetic testing and broader biotechnology concepts. Moreover, the gene sequencing market is expected to experience exponential growth in the coming years.
“Estimates suggest that the global DNA sequencing market was valued at $6.2 billion in 2017 and is expected to reach $25.5 billion in 2025, with a compound annual growth rate (CAGR) of 19 percent,” according to Global X research.
Computational genomics, which uses statistical data to glean insights from genome sequences, is another fast-growing market that could benefit GNOM over the long term.
“The global computational biology market is expected to value $6.8 billion in 2024, up from $2.3 billion today with a CAGR of 19.5 percent,” said Global X.
Computational genomics is currently being used to find treatments for complex diseases, including Alzheimer's, cancer and diabetes, among others.
GNOM enters a crowded segment of the ETF space. With the debut of the Global X fund, there are now almost 20 U.S.-listed biotechnology ETFs, including leveraged funds.
GNOM has an annual fee of 0.68 percent, or $68 on a $10,000 investment. While that is higher the fees found on basic biotechnology ETF's GNOM undercuts the 0.75 percent charged by an existing, actively managed genomics ETF and the fees found on several other highly focused, passive biotech ETFs.
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