Yesterday, iShares rolled out the first funds in what it is referring to as its “megatrends” series: the iShares Genomics Immunology and Healthcare ETF (IDNA) and the iShares Cybersecurity and Tech ETF (IHAK).
The funds come with expense ratios of 0.47% and list on the NYSE Arca exchange.
What Makes A Megatrend
The new family of ETFs is meant to capture the performance of investment concepts that have developed due to paradigm shifts in various categories. According to its website, BlackRock has identified five megatrends: technological breakthrough; demographics and social change; rapid urbanization; climate change and resource scarcity; and emerging global wealth.
A white paper by the firm notes that the investment opportunities it has identified based on these megatrends often cross traditional sector and industry boundaries, as well as geographic designations.
“The iShares megatrend ETF suite seeks to capture the most powerful investment trends driving the global economy today, and that we expect to play out for decades to come,” said Armando Senra, head of U.S., Canada and Latin America iShares.
“The ability for anyone to access these targeted growth opportunities through an ETF represents the next frontier of efficiency, transparency and the democratization of investing,” he added.
The issuer identifies several of its existing ETFs as capturing megatrends performance:
- iShares Exponential Technology ETF (XT)
- iShares Robotics & Artificial Intelligence ETF (IRBO)
- iShares Global Infrastructure ETF (IGF)
- iShares Emerging Markets Infrastructure ETF (EMIF)
- iShares U.S. Infrastructure ETF (IFRA)
- iShares Self-Driving EV and Tech ETF (IDRV)
- iShares Clean Energy ETF (ICLN)
- iShares MSCI China A Shares ETF (CNYA)
The two new ETFs, IDNA and IHAK, take a global perspective on their respective spaces, and include companies that generate at least half their revenues from the targeted investment concept. But the methodologies differ a bit.
IDNA’s companies are selected from three FactSet Revere industries: biopharmaceutical industries, healthcare equipment industries, and healthcare services industries.
Companies are scored on their level of involvement using a keyword search of a FactSet database to determine each company’s level of relationships with genomics and methodology products. From there, the methodology selects the 50 companies with the highest scores and weights them by modified market capitalization, IDNA’s prospectus says.
IHAK takes a slightly different path. The index provider conducts regular analyses to determine which FactSet Revere subindustries offer the most exposure to cybersecurity software, hardware and related services.
Using public filings and disclosures, it ranks companies based on how relevant they are to the cybersecurity theme and selects the top securities. The index is rebalanced twice a year and reconstituted once a year, with chosen companies weighted by modified market capitalization, according to the prospectus.
Contact Heather Bell at [email protected]