In the world of weight loss, there may be more reason to invest in a single stock than in an exchange-traded fund.
Amplify ETF and Roundhill Investments each filed prospectuses last week to launch funds focused on weight-loss companies, a move that Strategas ETF and technical strategist Todd Sohn believes hinges on the performance of two dominant stocks: Novo Nordisk (NVO) and Eli Lilly (LLY).
“The major holdings will be Eli Lilly and Novo Nordisk, and probably one or two other big companies… and some manufacturers further down the supply chain,” he told CNBC’s “ETF Edge” this week. “Ultimately, it’s up to the giants who play these drugs.”
With only two companies currently leading the U.S. obesity drug market, ProShares’ Simeon Hyman questions the relevance of weight-loss ETFs for investors looking to buy into the sector.
“I think that’s one of the challenges whenever you see innovation like this,” the firm’s global investment strategist said in the same interview. “If the incumbents benefit, then maybe there’s no need for the theme itself use.”
Strategas’ Sohn also said ETFs based on themes rather than sectors or indexes could lose favor with investors.
“I think the themes are kind of on the back burner right now, especially with how they’ve been the past few years. I think there’s room for them, but more than one and it’s going to be difficult,” he said.
Novo Nordisk shares were up 29% so far in 2024 as of Wednesday’s close, and Eli Lilly shares were up 30%.broader Healthcare Select Sector SPDR (XLV) It was 7% higher during the same period.
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