ETF NEWS - ULTUMUS

Fighting Fat ETF

Written by Bernie Thurston | 15 January 2021

USA

IndexIQ launches healthy heart ETF

Insurance giant New York Life is listing a new ETF -- and its good for your heart. 

The IQ Health Heart ETF (HART), which will launch this month, starts by looking for global companies that are “relevant” to heart health. Relevance is defined to include companies that: medical technology; healthy food; exercise products; heart information; health technology.

Companies that are sufficiently relevant are then filtered through an ethical screen, which excludes common corporate baddies in tobacco, weapons, gambling, porn, etc. The most 80 relevant companies are chosen and weighted by market capitalisation. The fund charges 0.45%

Analysis – the new obesity ETF

There was a thematic ETF – shuttered five weeks ago – called The Obesity ETF (SLIM). Run by Janus Henderson, it invested in companies “positioned to profit from servicing the obese,” such as healthcare companies. 

It may sound like an absurd fund, but SLIM was a fantastic ETF by any measure. It was a strong performer. It drove plenty of headlines. It had support from economic trends—one third of Americans are obese, the problem is getting worse. 

Yet SLIM never managed to find buyers. Perhaps investors never quite liked the idea of profiting from fat people. Or perhaps investors thought there were easier ways, like buying McDonalds’ shares. 

I suspect SLIM will set precedent for HART. Many (most?) people with heart problems are just fat. Investing in heart health is, in large measure, investing in servicing the obese. 

Let’s see how this goes.