Latest Wellness ETF Supplement: Peptides

Who’s calling the shots? 

Last week, REX Shares launched the REX Peptide ETF (PEPT), which holds companies (including pharma giants Eli Lilly and Novo Nordisk) that develop and manufacture peptide products, like GLP-1s. AdvisorShares has filed for a competing product, the Peptide and Human Enhancement ETF. There is a growing list of products that try to cash in on the wellness zeitgeist — but much as with GLP-1 users, appetite may be suppressed. 

“This all started with the broader interest in peptides that has come both from the GLP-1 revolution as well as the more tongue-in-cheek, gray market peptide stuff that you see on social media,” said Bill Birmingham, head of research at REX Financial. “We found that there are many companies that sit outside of the Lilly/Novo duopoly that are starting to emerge with treatments for other big diseases.” 

Wellness Dot Com

The global wellness industry is a $2 trillion market and growing. As the boomer generation ages, more people need healthcare, and Gen Z and millennials drive 41% of US spending on wellness, despite only making up 36% of the adult population. “Investors are starting to look at healthcare more as a modern consumer, tech-type” investment, said Sylvia Jablonski, CIO at Defiance ETFs. “Healthcare is now this convergence of biotech, med tech, pharmaceuticals research and the internet.” 

There are already a handful of funds riding the wellness wave: 

• Tema has the Heart & Health ETF (HRTS), which invests in companies focused on chronic disease treatment and prevention. The fund is up nearly 7% this year with about $55 million under management.
• Defiance has several single-stock leveraged ETFs focused on companies in this space, like the Daily Target 2X Long HIMS ETF (HIMZ), with about $58 million under management, and the Daily Target 2X Long NVO ETF (NVOX) with about $39 million in assets. 
• GraniteShares is prepping several single-stock leveraged ETFs focused on Strava, Oura and Whoop (which does wearable health tech). ProShares and Themes ETFs have filed for Oura funds as well. 

All Quiet on the Wellness Front: Despite the impossibility of existing in the world without hearing the word “wellness” at least once a day, flows haven’t quite matched the hype. HRTS has lost $2.5 million this year, HIMZ has net inflows under $1 million and NVOX has a year-to-date outflow of $34 million, according to ETF.com. “Healthcare is seen as a little boring in a bull market,” said Yuri Khodjamirian, CIO at Tema. Still, investors shouldn’t write it off, he said. If “you look at next year’s earnings forecast by sector, healthcare is number two in terms of earnings growth after tech. … It’s defensive, it’s growthy and there’s a valuation opportunity, because people have kind of forgotten about it.” 

Birmingham said he sees this as an opportunity. “I’d rather launch into a quiet equity market from a price perspective on these names than put something in at the top,” he said. “You don’t have to battle through stocks going down and coming back up again.”