Tema ETFs hops on weight-loss drug frenzy with its new cardiovascular fund

[November 22, 2023]  By Bansari Mayur Kamdar

(Reuters) - Tema ETFs has launched a new exchange traded fund (ETF) that tracks popular drugmakers like Novo Nordisk and Eli Lilly, aiming to tap into growing demand for their weight-loss and diabetes drugs.

The Tema Cardiovascular & Metabolic ETF invests in companies tackling diabetes, obesity and cardiovascular diseases, according to the New York-headquartered platform's website.

Shares in Eli Lilly and Novo Nordisk, which are among the fund's top holdings, have rallied 63% and 50%, respectively, so far this year after their treatments like Ozempic, Wegovy and Mounjaro proved effective in treating diabetes and weight loss and may also help cut the risk of stroke or heart attack.

The advances of the class of weight-loss and diabetes therapies known as GLP-1 receptor agonists, are only the tip of the iceberg, said David K. Song, investment partner and head of life sciences at Tema ETFs.

"With tools like gene editing, genetic medicines, we have commercial validation of weight loss therapies and an overall renaissance in the field of cardiovascular innovation," he added.

"We see significant long term opportunities in this area of life sciences over the next several years."

Boxes of Ozempic and Mounjaro, semaglutide and tirzepatide injection drugs used for treating type 2 diabetes and made by Novo Nordisk and Lilly, is seen at a Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. REUTERS/George Frey/File Photo

As the global obesity crisis gathers pace, Morgan Stanley Research expects the market for obesity drugs to surge to $77 billion in 2030 from $2.4 billion in 2022, according to a note earlier this year.

Other ETFs like the VanEck Pharmaceutical ETF, which has Novo Nordisk among its biggest holdings and total assets of $383.81 million, has seen net inflows of nearly $26 million from August, according to Lipper data.

The Tema fund has a net expense ratio of 0.75%.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Emelia Sithole-Matarise)

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