Advisors in Focus- February 17, 2021

Not to be a Debbie Downer but coronavirus (and its variants) are not going away anytime soon. Check out the stats: according to Johns Hopkins University, there are 110 million cases worldwide. Tragically, over 2 million global citizens have died due to complications from the virus. The fragility of human mortality is increasing, which of course is fueling the race to the COVID cure. Simultaneously, experts are saying the “pandemic” is quickly becoming an “endemic.” Investors are channeling their inner Jerry McGuires, and pouring dollars into biotech R&D. As such, TrackStar activity sees financial advisors focusing on the healthcare space in search of opportunities. On December 11, we focused on oncology names that were populating the top searches for FAs. Today, we will take a look at a Chinese healthcare ETF that is finding itself in the spotlight. 

This week, the KranShares MSCI All China Healthcare Index (KURE) is seeing the second biggest surge in ETF searches by “All Financial Analysts” according to TrackStar data. KURE tracks an index of large- and mid-cap publicly issued shares of Chinese companies in the healthcare sector. Chinese companies represent 56.6% of the weighting while Hong Kong companies make up 42.6%. The fund focuses on pharmaceuticals which are 52.8% of the weighting but also has representation in Healthcare Equipment (17.6%), Biotechnology (15.5%). Healthcare Providers (9.8%) and Food & Drug Retailers (3.8%).

Since its inception in February of 2018, KURE has provided steady returns to investors. The ETF is up 15% over the past month and 34% since breaking out above $35 resistance in mid-December. This corresponds with the December 11 Advisors in Focus when we highlighted the move in oncology plays following the American Association for Cancer Research Breast Cancer Symposium. The ETF has a manageable Expense Ratio of 0.65%. Valuation is frothy at 67x P/E but most ETFs and stocks are trading above historical norms.

TrackStarIQ Data

Here are some highlights of research surges* this week which includes an ESG, energy, and of course, a Chinese healthcare ETF: 

RANKTOP ETFS – BY ALL FAs (Surge Traffic) This WeekTickerTOP STOCKS- BY ALL FAs (Surge Traffic) This WeekTickerTOP INDUSTRIES BY ALL FAs (Surge Traffic) This Week TOP ETF CATEGORIES BY ALL FAs (Surge Traffic) This Week
1Invesco S&P MidCap 400 Pure Value ETFRFVCorning IncGLWState commercial banksSmall Cap Value Equities
2KraneShares MSCI All China Health Care Index ETFKURENatera IncNTRABroadcasting – RadioMortgage Backed Securities
3iShares MSCI Canada ETFEWCAlset Ehome Intl IncAEIAnimal specialties, miscMetals
4Invesco S&P 500 Equal Weight Technology ETFRYTBionomics Ltd.BNOEFLodgingHedge Fund
5iShares MSCI USA ESG Select ETFSUSAPtc TherapeuticsPTCTTobaccoInverse Equities
6ProShares UltraShort S&P 500SDSSocket MobileSCKTMortgage FinancePreferred Stock/Convertible Bonds
7Quadratic Interest Rate Volatility and Inflation Hedge ETFIVOLBiomarin PharmaceuticalsBMRNAuto & Truck DealershipsPreferred Stock/Convertible Bonds
8iShares Core S&P Small-Cap ETFIJRSociedad Quimica Y Minera S.A.SQMUraniumLeveraged Real Estate
9Renaissance International IPO ETFIPOSStrongbridge Bio OrdSBBPPublishingLeveraged Bonds
10WisdomTree US LargeCap Dividend ETFDLNAlnylam PharmaceuticalsALNYInsurance BrokersLeveraged Commodities
11Columbia Research Enhanced Value ETFREVSPyxis TankersPXSElectronic ComponentsReal Estate
12Invesco BulletShares 2023 Municipal Bond ETFBSMNWashington Prime Group IncWPGGrocery StoresMLPs
13iShares MSCI Hong Kong ETFEWHBluebird BioBLUEWholesale-Machinery, Equipment & SuppliesOil & Gas
14Amplify Seymour Cannabis ETFCNBSBluefly IncBFLYDiscount StoresInternational Government Bonds
15ProShares Ultra Short Oil & GasDUGNeoMedia Technologies, Inc.NEOMEducation & Training ServicesInverse Commodities
16SPDR S&P Oil & Gas Exploration & Production ETFXOPFrontline LtdFROInsurance – Property & CasualtyMid Cap Growth Equities
17Schwab US Dividend Equity ETFSCHDArtius Acquisition Inc Cl AAACQIntegrated Freight & LogisticsGovernment Bonds
18Fidelity MSCI Utilities Index ETFFUTYMagna InternationalMGAMedical DistributionAlternative Energy Equities
19First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index FundGRIDAlj Regional HoldALJJLeisureLeveraged Volatility
20WisdomTree US MidCap Earnings ETFEZMCaredx IncCDNAComputer HardwareDiversified Portfolio

What makes KURE interesting? Drugs, baby. The ETF includes WuXi Biologics (WXIBF), an integrated technology platform for drug development, which has an 8.7% weighting in the fund; Jiangsu Henrgrui Medicine, which is traded in China and is a pharma company engaged in sales of healthcare products; Shenzhen Mindray, which development of household products and medical equipment; WuXi AppTec, which manufacturers small molecule drugs and cell gene therapies; Aier Eye Hospital Group, which provides ophthalmologica: services; and BeiGene (BGNE), a commercial-stage biopharma that develops molecularly targeted and immuno-oncology drug candidates.

Speaking of drugs, BeiGene is the only ADR of the group. It trades under the symbol BGNE. With many of the oncology names, this stock has upward momentum. It’s been up 176% in the past year, running 63% since early December alone. This morning, BGNE announced the United States Food and Drug Administration accepted a supplemental new drug application for BRUKINSA. Some details: this is for the treatment of adult patients with Waldenstrom’s Macroglobulinemia, a rare indolent B-cell lymphoma that occurs in less than two percent of patients with non-Hodgkin’s lymphoma. A PDUFA date has been set for April 18, 2021. BGNE is seeing a sell-the-news reaction to the headline as it tumbles from $380 to the $360 area, setting up a test of its 20-day moving average.

Want more? Check out these healthcare names garnering the attention of financial advisors according to our search data:

  • Natera, inc (NTRA), #2 in Top Stocks by All FAs (surge traffic)- NTRA Is a cell-free DNA testing company that provides preconception and prenatal genetic testing services by drawing blood from the mother. This morning, NTRA announced a partnership in collaboration with Personalis (PSNL) for treatment monitoring and molecular residual disease. The stock is seeing profit-taking this morning as it slips back from $125 resistance. NTRA has a $9/6 billion market cap with a float of 82 million shares.
  • PTC Therapeutics (PTCT); #5 in Top Stocks by All FAs (surge traffic)- A biopharmaceutical company that focuses on the development of medicines for the treatment of rare disorders such as Duchenne muscular dystrophy. PTCT will present its fourth-quarter earnings on February 25. Investors have been closely watching to see signs of when the company believes it will be able to breakeven. T. Rowe Price, Fidelity, and RTW Investments all recently filed 13Gs showing 5% ownership. Bank of America downgraded PTCT to Neutral from Buy on February 12. PTCT is down approximately 18% after hitting all-time highs ($70.82) on January 8.

  • Biomarin Pharmaceuticals (BMRN);  #7 in Top Stocks by All FAs (surge traffic)- BMRN commercializes therapies for people with serious, life-threatening diseases and medical conditions. Shares of BMRN were decimated back on August 21 when the company received a Complete Response Letter (meaning the company had to go back to the drawing board re: data) from the FDA for its Valoctocogene Roxaparvovec Gene Therapy for severe Hemophilia. This would have been the first approved hemophilia A gene therapy. BMRN shares fell from $120 to $80 in reaction to the news. Shares have settled down and are climbing higher, riding the 50-day moving average. BMRN reports results on February 25th where investors will be looking for an update on its ValRox therapy.

So where does this leave us re: healthcare spending? “To the moon” as the Redditors say. U.S. households allocate on average 8.1% of spending on healthcare in 2018 an increase of 5.9% in 2004 according to BLS. Healthcare spending increased 4.5% in 2019, reaching $3.8 trillion or $11,582 per person. As long as these trends continue, financial advisors will remain focused on healthcare, and we’ll be right here to deliver the goods.

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