ETF Watch: Principal Adds Niche Funds

Principal delved into the niche ETF space with the funds launched today on the Nasdaq. The Principal Healthcare Innovators Index ETF (BTEC) and the Principal Millennials Index ETF (GENY) will target two very different spaces. The two ETFs come with expense ratios of 0.42% and 0.45%, respectively.

BTEC covers mainly small- and midcap U.S. health care companies that are still in the development phase with or seeking regulatory approval for their products rather than actively selling and marketing them, the prospectus said. Within the health care space, the fund is focused on the equipment and services, biotechnology, pharmaceuticals and life sciences categories.

Although there are a few ETFs that invest in companies in the clinical trials phase, there doesn’t appear to be a product with the broad scope offered by BTEC. Still, the $135 million ALPS Medical Breakthroughs ETF (SBIO) is probably the most comparable product currently trading.

GENY is more of a consumer-oriented fund that looks to invest in companies offering products and services that are popular with the millennial generation, which is basically defined as adults born after 1980. The index selects components from across the size spectrum, mainly from the consumer goods, social media, e-commerce, digital media and technology categories, according to the prospectus. Components are weighted based on a combination of market capitalization and an analysis of the company’s exposure to the millennial generation through its business activities and strategy.

GENY is not the first of its kind. The Global X Millennials Thematic ETF (MILN) can lay claim to that title after its May 2016 rollout.

Contact Heather Bell at [email protected].