Covid ETF

Covid ETF

USA

Coronavirus ETF

Pacer Financial, an ETF sponsor based (literally) 15 minutes down the road from Vanguard in Malvern, Pennsylvania, is listing an ETF that learns to love the coronavirus. 

The Pacer BioThreat ETF (VIRS) will be passively managed. The index will include biotech companies trying to develop a vaccine, ecommerce companies, and work from home enablers — among others. 

Companies are identified by the index provider’s proprietary methodology. The prospectus indicates that this methodology involves reading news, quarterly reports and checking companies websites. Stocks picked will be weighted by market capitsalisation.

The prospectus does not give an expense ratio. 

Analysis – Pace, Pacer. Pandemic preparation primes people’s paranoia

So far as fad-chasing ETF listings go, this is a pretty good one. Many kinds of companies have benefited from the coronavirus. And many look like they’re set to continue benefiting. The main two sectors this fund will invest in – healthcare (biotech presumably) and industrials – look likely to be among the top benefactors. 

The lasting impression I got reading the fund’s documentation was that the SEC must have stopped ETF providers calling funds a “coronavirus ETF”. There’s been plenty of other lethal viruses come to light in recent years – Zika, H1N1, Ebola, avian flu, MERS – but none of them triggered ETF listings. So the notion retailed in this fund’s name and prospectus that it’s for all kinds of viral threats rings a bit false.