ETF Spotlight: HIMZ on the Rise After Wegovy Hookup

The Defiance Daily Target 2X Long HIMS ETF (HIMZ) more than quadrupled over the past month, making it the top-performing exchange-traded fund, as its underlying stock, Hims & Hers Health Inc. (HIMS), surged following a partnership with Novo Nordisk (NVO).

The leveraged ETF, which has more than doubled just since the beginning of May, seeks to deliver twice the daily share price movement of Hims & Hers Health through derivatives like swap agreements, according to FactSet data. HIMZ launched March 12 and has attracted $80.1 million in assets under management with a 1.31% expense ratio.

HIMZ: Explosive Performance

The fund's explosive performance demonstrates how leveraged single-stock ETFs can magnify movements in their underlying holdings, with HIMZ capturing double the gains from HIMS's partnership-driven rally that began in late April.

HIMS stock began its climb after announcing a collaboration with Novo Nordisk to offer the weight loss drug Wegovy through its platform, according to the company's press release. The telehealth company's shares gained more than 41% in the week following the April 29 announcement and now trade about 122% higher over the past month.

The partnership allows Americans to access Wegovy and Hims & Hers membership services at a unified price starting at $599 per month, according to the announcement. Andrew Dudum, CEO and founder of Hims & Hers, called the collaboration "just the first step towards delivering that future" of consumer-centered healthcare.

HIMZ has pulled in $28.5 million in net fund flows over the past month and $37.8 million year to date, according to FactSet data. The ETF maintains daily leveraged exposure equivalent to 200% of HIMS's daily percentage change through daily rebalancing, making it a high-risk investment that could lose value over time even if the underlying stock performs well.

Weight Loss Sector Shows Mixed Results

Despite the HIMS surge, the Amplify Weight Loss Drug & Treatment ETF (THNR), which holds HIMS as its third-largest position at 7.5%, gained just 7.4% over the past month, according to FactSet data. THNR is the ETF with the largest allocation to HIMS stock.

THNR tracks companies involved in manufacturing and enabling GLP-1 agonist pharmaceutical businesses, with drug manufacturers comprising 70% of the portfolio, according to FactSet data.

THNR has experienced outflows of $444,000 over the past month and $1 million year to date, contrasting sharply with HIMZ's inflows, according to FactSet data. The fund holds Eli Lilly and Co. (LLY) as its top holding at 14% and Novo Nordisk at 13.5%.