A leading provider of exchange-traded funds, Roundhill Investments, is wagering on the enduring appeal of GLP-1 weight loss medications.
Last week, the firm initiated trading of its GLP-1 & Weight Loss ETF (OZEM), which combines industry leaders Eli Lilly and Novo Nordisk with firms formulating new weight loss and diabetes solutions. The firm’s CEO Dave Mazza believes they are tapping into a market with enormous growth potential.
“Our approach allows us to emphasize companies that are already marketing these drugs and then identify those in specific phases of development. It’s an effective strategy,” Mazza explained on CNBC’s “ETF Edge” last Monday.
According to Roundhill’s website, Eli Lilly and Novo Nordisk each constitute about 20% of the ETF’s weightage. The next three largest positions are held by Zealand Pharma, Amgen and Chugai Pharmaceutical, each with less than a 5% weighting.
Over the past year, Eli Lilly has surged 90% and Novo Nordisk has risen 68%, as of the market close last Friday. Despite this rise, Mazza dismissed worries that investors may have missed the boat, stating that the weight loss drug sector is still in its infancy.
“There’s ample opportunity for growth as more companies enter the market, either with more potent drugs or with non-injectable options,” he said.
Mazza also draws a parallel between the evolution of GLP-1 drug manufacturers and AI-related stocks.
“It’s similar to how Nvidia had an early advantage with AI. They just got ahead,” said Mazza. “[Eli Lilly and Novo Nordisk] shifted their focus to diabetes and weight loss drugs a few years back, and they’ve been able to bring remarkable products to market.”
Shares of Roundhill’s GLP-1 & Weight Loss ETF dipped by nearly 2% in the week following its launch last Tuesday.
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