Index Universe reported last week that Grail Partners has requested SEC approval to launch two new exchange-traded funds (ETFs) which are actively managed and do not track an underlying index. The Grail American Beacon Large Cap Value ETF and the Grail American Beacon International Equity ETF would not have any restrictions on trading, but Grail expects to provide more details on target turnover rates for the funds once the managers and investment strategy is in place.
As an alternative investing strategy, why not create your own global healthcare ETF based on a database of over 700 companies organized into 10 unique indexes plus a calendar of pending FDA decisions and clinical trial results? Stay tuned to my blog posts for details on the launch (expected next month) of a new, full-featured website for investors and traders in the healthcare sector. The website will focus on pending FDA decisions, clinical trial results, and other catalysts for traders and investors of biotech, pharma, and diagnostic stocks.
The site will offer a mix of free and premium features, which will be priced competitively (i.e. less than) existing services (likely starting at $25/month or $250/year) such as RealMoney.com Biotech Select ($399.95/year) and Revere Data FDA Approval Three-Month Decision Report ($125/month). Premium features will include full access to 10 healthcare indexes, commentaries, and a calendar of pending FDA + clinical trial dates, which includes a database exceeding 700 companies in the global healthcare sector.
A Seeking Alpha article earlier this month by Ron Rowland identifies 139 names (97 ETFs + 42 ETNs) on ETF Deathwatch, including products which are at least six months with an average daily value traded of less than $100,000 in December. The ETF industry is poised to continue its growth in terms of products and net assets while taking market share from mutual funds given advantages such as lower expense ratios, transparency of holdings, all-day trading, and access to a wide range of assets classes and geographies.
However, given renewed concerns in the financial sector affecting the stock prices and operations of major ETF providers such as State Street (STT) and Barclays (BCS) and an overall cautious stance with regard to launching new products at this time across the industry; the new indexes and ETF ideas I have developed are unlikely to attract licensing deals for commercialization. Given the tremendous cost associated with launching, maintaining, and marketing an exchange-traded product; the cautious stance by the industry at this time is reasonable given the risks of product failure and uncertainty with regard to the stock market and economy.
Considering these factors, the new website for healthcare investors and traders will offer an alternative to investing directly in ETFs – allowing users to build their own ETF by providing access to a database of over 700 stocks in the healthcare sector which are categorized into 10 unique indexes, in addition to a calendar of pending FDA decisions and clinical trial results. Given the wide availability of low-cost, online trading platforms; investors and traders can cost effectively create their own ETFs by choosing a basket of stocks in a particular healthcare index or create a global healthcare composite across the entire sector or just actively trade stocks with pending catalysts in the form of FDA decisions or clinical trial results.
The site will offer services and features for active traders, long-term investors, and everyone in between. The initial website will focus on the 700 companies and 10 healthcare sector indexes, and may expand to include the other 500 companies and 11 non-healthcare + transport indexes. The indexes below are designed to provide investment ideas beyond the well known companies included in widely held sector and industry-based ETFs such as the Healthcare Sector SPDR (XLV), iShares Dow Transports (IYT), Consumer Staples Sector SPDR (XLP), Biotech HOLDRs (BBH), Pharmaceutical HOLDRs (PPH), and PowerShares Dynamic Pharma (PJP).
Healthcare (10):
1.) Hospitals & Outpatient Care
2.) Pet Care & Animal 'Farma'
3.) Cosmetic & Reconstructive Medicine
4.) Healthcare Cost Containment
5.) Health Information Technology
6.) Preventive Medicine
7.) Health Innovators
8.) Emerging Bio-Pharma
9.) Emerging Diagnostics
10.) Micro-Cap Bio-Pharma
Transportation (5)
1.) Air Transport
2.) Maritime Transport
3.) Personal Transport
4.) Trucking & Logistics
5.) Railroad Industry
Non-Healthcare and Defensive (6):
1.) Highly Defensive PerformIdex
2.) Global Telecom Services Dividend Index
3.) Global Tobacco
4.) Scandinavian Select Nordic Region
5.) Nation (Market) Cap Leaders
6.) Carbon Credit Trading
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$43.56 (01/18/09)
