Construction of a biotech ETF🧬🚀
I'm a fan of the whole topic and don't really like the sector ETFs on the market in terms of costs and performance. That's why I've dared to construct my own "biotech ETF". I've written down my thought process here and hope you enjoy it a little 😉
1. focus areas according to growth and profitability
The percentage distribution of focus areas is based on an analysis of the growth and profitability potential of each therapeutic area within the biotechnology industry, taking into account various market conditions and dynamics. The reasons for this distribution are as follows:
- Oncology (25%): The oncology market is a large and rapidly growing market due to the high prevalence of cancer and increasing demand for innovative cancer therapies. The growth potential is supported by the continuous introduction of new cancer drugs and therapies.
- Neurology (20%): Although the neurology market is smaller compared to the oncology market, it still offers considerable potential for growth and profitability. The increasing prevalence of neurodegenerative diseases and the need for novel treatment approaches contribute to this potential.
- Immunology (15%): Immunology is an established market with a wide range of therapies for various autoimmune diseases and cancers. Although the market is relatively saturated, advances in immunotherapy continue to offer opportunities for growth and profitability.
- Infectious diseases (20%): The infectious diseases market has gained significant importance due to global health crises such as the COVID-19 pandemic. The increasing demand for vaccines, antiviral therapies and diagnostic tests to combat infectious diseases is contributing to robust growth and profitability potential.
- Cardiovascular diseases (10%): Although the cardiovascular disease market is not growing as fast as other areas, it remains a significant market with some growth potential. Advances in the treatment and prevention of cardiovascular diseases could contribute to further growth.
Genetic diseases (10%): The market for genetic diseases is smaller but highly specialized and growing thanks to advances in genomic research and genome editing technologies. The increasing demand for personalized therapies for rare genetic diseases is contributing to stable growth.
By taking into account market size, growth potential and profitability, we have determined a percentage distribution of focus areas that reflects the attractiveness of each area for investment in the Biotech ETF.
2. selection of companies and their focus areas
Based on the evaluation of the focus areas, we have selected ten biotech companies that cover a broad range of therapeutic areas and hold leading positions in their respective focus areas. The companies and their focus areas as well as the percentage distribution are as follows:
- Amgen ($AMGN (-1,1 %)):
Introduction: Amgen is a leading global biopharmaceutical company dedicated to the discovery, development and commercialization of innovative therapies. The company is known for its breakthrough developments in oncology, immunology and genetics.
Focus areas:
Oncology: 30%
Immunology: 20%
Cardiovascular diseases: 20%
- Genetic diseases: 30%
- Regeneron Pharmaceuticals ($REGN (+0,79 %)):
Introduction: Regeneron Pharmaceuticals is a biopharmaceutical company focused on the development of drugs for serious diseases. The company is known for its pioneering research and development in the fields of oncology, neurology, immunology and infectious diseases.
Focus areas:
Oncology: 30%
Neurology: 30%
Immunology: 20%
- Infectious diseases: 20%
- Vertex Pharmaceuticals ($VRTX (+1,07 %)):
Introduction: Vertex Pharmaceuticals is a leader in the development of therapies for rare genetic diseases. The company is dedicated to researching and developing drugs to improve the lives of patients with genetic disorders.
Focus areas:
- Genetic diseases: 100%
- Intellia Therapeutics ($NTLA (+1,95 %)):
Introduction: Intellia Therapeutics is a pioneer in the field of genome editing, utilizing CRISPR/Cas9 technology to develop therapies for genetic diseases, oncology and infectious diseases. The company strives to create the next generation of gene therapies.
Focus areas:
Genetic diseases: 50%
Oncology: 30%
- Infectious diseases: 20%
- Biogen Inc. ($BIIB (-0,1 %)):
Introduction: Biogen is a leading global biotechnology company focused on the research and development of therapies for neurological diseases. The company has made some of the most significant breakthroughs in the treatment of diseases such as multiple sclerosis and Alzheimer's disease.
Focus areas:
- Neurology: 100%
- Moderna, Inc. ($MRNA (+5,85 %)):
Introduction: Moderna is an innovative biopharmaceutical company focused on the development of mRNA therapies and vaccines. The company has attracted worldwide attention for the development of an mRNA vaccine against COVID-19.
Focus areas:
Oncology: 70%
- Infectious diseases: 30%
- Illumina, Inc. ($ILMN (+2,03 %)):
Introduction: Illumina is a leading provider of genomics and genomic analysis technologies. The company is revolutionizing genomics by developing cutting-edge sequencing technologies and making significant contributions to genetic disease research.
Focus areas:
- Genetic diseases: 100%
- CRISPR Therapeutics AG ($CRSP (+4,78 %)):
Introduction: CRISPR Therapeutics is a leader in the application of CRISPR/Cas9 genome editing technologies to treat genetic diseases. The company has the potential to revolutionize the way we treat genetic diseases.
Focus areas:
- Genetic diseases: 100%
- Alexion Pharmaceuticals, Inc.$n/a): (ISIN: US0153511094)
Introduction: Alexion Pharmaceuticals is a biopharmaceutical company focused on developing therapies for rare and life-threatening diseases. The company has a strong presence in the fields of neurology and immunology.
Focus areas:
Neurology: 40%
- Immunology: 60%
- Qiagen N.V. ($QGEN):
Introduction: Qiagen is a global leader in molecular diagnostics and research products. The company is known for its innovative technologies to diagnose infectious diseases and support life science research.
Focus areas:
Infectious diseases: 100%
This selection of companies represents a diverse range of focus areas and positions in the biotechnology industry and enables
3. weighting of the ETF based on focus areas and companies
Finally, we determined the allocations for each stock based on its exposure to the focus areas and its relative importance within the portfolio. We considered both the growth and profitability potential of each focus area. The final allocation of stocks is as follows:
Regeneron Pharmaceuticals (ticker: REGN): 25%
Moderna, Inc. (Ticker: MRNA): 18%
Intellia Therapeutics (Ticker: NTLA): 16%
Amgen (Ticker: AMGN): 16%
Alexion Pharmaceuticals, Inc (Ticker: ALXN): 10%
Biogen Inc (Ticker: BIIB): 6%
Qiagen N.V. (Ticker: QGEN): 5%
Vertex Pharmaceuticals (Ticker: VRTX): 2%
Illumina, Inc. (Ticker: ILMN): 2%
CRISPR Therapeutics AG (Ticker: CRSP): 2%
This weighting ensures that the portfolio has a good balance between different focus areas as well as an appropriate exposure to the leading companies in the biotechnology industry.
By considering market size, growth potential and profitability, we have determined a percentage distribution of focus areas that reflects the attractiveness of each area for investment in the biotech ETF.
I look forward to receiving feedback and assessments ✌️😉
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