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Loncar Debuts ETF to Play China’s Biotech, Pharma Companies

This article was originally published on ETFTrends.com.

Loncar Investments has partnered up with Exchange Traded Concepts to launch a new ETF that tracks the growing biopharmaceutical sector in China.

On Wednesday, Loncar Investments rolled out the Loncar China BioPharma ETF (NasdaqGM: CHNA) , which has a 0.79% expense ratio.

“China aims to become a leader in global medicine,” Brad Loncar, Chief Executive Officer of Loncar Investments, said in a note. “Regulatory reform and a new rule allowing pre-revenue biotech companies to list on the Hong Kong Stock Exchange may signal a new era for innovative drug development in the region. We think this is an important trend in healthcare, as it has the potential to spur growth and benefit patients worldwide.”

The China Food and Drug Administration has enacted recent reforms as the country modernizes the industry. Meanwhile, more Chinese citizens are able to afford innovative medicines as their standard of living rises.

The Loncar China BioPharma ETF tries to reflect the performance of the Loncar China BioPharma Index, which tracks 22 Hong Kong-listed and six Nasdaq-listed pharmaceutical and biotech related Chinese companies. The underlying index includes pharmaceutical companies, biotech companies, drug manufacturers, diagnostics companies, wholesalers or distributors of biopharma products, and biopharma service providers, according to the fund's prospectus.

Related: J.P. Morgan Expands BetaBuilders ETF Suite with Canada, Asia-Pacific

To maintain a focus on innovation in the Chinese biopharma sector, companies in are screened to eliminate those that focus strictly on manufacturing active pharmaceutical ingredients. Additionally, the remaining companies only include those whose principal corporate headquarters is in China or at least 51% of the value of their product revenue and pipeline is tied directly to the Chinese market. The pool is further screened for investibility.

The index also follows a modified equal-weighted methodology to emphasize the role of larger companies in the index.

“We are proud to deliver another cutting-edge, biotech-focused product to the market,” J. Garrett Stevens, CEO of Exchange Traded Concepts, said in a note. “China’s goal of moving its life sciences industry towards innovation is one of the most exciting themes within biotechnology, and the Loncar China BioPharma ETF gives investors a front row seat to this transformation.”

For more information on new fund products, visit our new ETFs category.

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