HAN-Gins Cloud Technology and Healthcare Innovation ETFs change to equal weighted indices with ESG screening

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HANetf is introducing new indices and names for its HAN-GINS Cloud Technology UCITS ETF (SKYY) and HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) as they build to target expanding growth opportunities in the Cloud Technology and Healthcare Innovation sectors.  

The funds will now be re-named the HAN-GINS Cloud Technology Equal Weight UCITS ETF (SKYY) and the HAN-GINS Indxx Healthcare Megatrend Equal Weight UCITS ETF (WELL).

The pandemic and global lockdowns have transformed both markets in the past year with Cloud spending expected to hit USD500 billion within two years and the emergence of healthcare innovation sectors such as telemedicine which is expected to grow at over 30 per cent a year to 2025.

Investor demand for solutions in the sectors has seen more than USD1 billion in assets invested in Cloud Technology UCITS ETFs since HANetf launched the first in the sector in Q4 2108 and large inflows into healthcare innovation during the pandemic demonstrates the long-term confidence in ongoing growth.

The HAN-GINS Tech Megatrend Equal Weight UCITS ETF – ITEK was the first equal weighted ETF in the HAN-Gins range and has provided a unique investment proposition for investors to access 8 megatrends including Robotics & Automation, Cloud Computing & Big Data, Cyber Security, Future Cars, Genomics, Social Media, Blockchain and Digital Entertainment in one single trade has less than 10 per cent exposure to the FAANGS yet still outperformed the Nasdaq 100 by over 12 per cent in 2020 (59.9 per cent ITEK return vs 47.6 per cent Nasdaq).  Past performance is no guarantee of future performance.  Switching SKYY and WELL to equal weighting should bring similar diversification advantages as enjoyed by investors in ITEK.

The effective date of the SKYY and WELL index change was 9 April 2021.

Updating the index methodologies positions the funds to benefit from a broader range of stocks – SKYY's index will track 75 constituents and include companies from the three major sub-themes of Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS). SaaS will have the larger share of the portfolio.

SKYY will track the Solactive Cloud Technology Equal Weight Index where top 10 holdings include companies such as Teradata Corp, Avaya Holdings, Hewlett Packard, Intel Corp, and Extreme Network. Around three-quarters of the index is US-based, and back-tested performance showed it achieved 56.88 per cent returns last year. 

For both funds there will be an inclusion of a negative ESG screen including: norms based screening, controversial weapons screening and a simple fossil fuel sector screen.

The new methodology enables WELL to add the sub-theme megatrend of telemedicine which has performed strongly during the pandemic as well as expanding healthcare analytics to include bioinformatics and adding information technology services and medical/nursing services as an industry. Sub-themes will be capped to avoid over-reliance.

The methodology switches to equal weighting from market capitalisation ensuring smaller innovative firms can contribute better to performance and an ESG screen is being added so only companies that comply with the UN Global Compact principles, including, companies with activities involving controversial weapons, and companies that have low fossil fuel exposure can be included.

WELL will track the Indxx Global NextGen Healthcare Index which focuses on megatrend sub-themes including Genome Sequencing, Healthcare Analytics, Robotics, Medical Devices, Biological Engineering, Neuroscience, Telemedicine, Healthcare Trackers, Nanotechnology and Bioinformatics.

Anthony Ginsberg, Co-Creator of the HAN-GINS Indxx Cloud Technology (SKYY) and Healthcare Innovation (WELL) ETFs, says: “2020 was transformational for Cloud and Healthcare Innovation as the pandemic and global lockdowns accelerated trends that were already underway.

“The switch to the digital world for work and leisure is likely to continue and will require continuing expansion of computational power while demand for innovative healthcare solutions will keep growing boosting companies in the sector.

“Changing the index methodology to expand the constituent base and add sub-themes which have grown in importance means both funds can ensure investors are positioned to benefit from newly emerging trends with high growth rates which the switch to equal weighting underpins. Incorporating basis ESG screens ensures we are aligned with what investors expect.”

Top 10 holdings include GW Pharmaceuticals, Cellink AB, Myriad Genetics, Inovalon Holdings, and Alector Inc Around 78 per cent of the index is North America-based and back-tested performance showed it achieved 57.6 per cent returns last year. Past performance is no guarantee of future performance.

Hector McNeil, Co-CEO of HANetf, says: “The three HAN-Gins ETFs are an important part of the ever expanding and market leading HANetf thematic ETF range. Over the last few years, the World has changed dramatically and expedited many megatrends, especially in technology and healthcare. There has also been a march for ESG principles to become more mainstream in asset management. The new indices for SKYY & WELL have greatly enhanced both ETFs for these trends and HANetf now has a wide selection of equally weighted products available.”