Ginsberg aims for diversification with the re-ordering of his HAN-GINS ETFs
Anthony Ginsberg has overseen the introduction of new indices and names for his HAN-GINS Cloud Technology UCITS ETF (SKYY) and HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL).
The funds are now re-named the HAN-GINS Cloud Technology Equal Weight UCITS ETF (SKYY) and the HAN-GINS Indxx Healthcare Megatrend Equal Weight UCITS ETF (WELL).
Updating the index methodologies is designed to position 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. Asia is approximately 15 per cent now.
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 is designed to enable WELL to now offer 10 sub-themes, formalising certain holdings in the ETF. New sub-themes include the megatrend of telemedicine which has performed strongly during the pandemic as well as expanding healthcare analytics and gene sequencing holdings. Additionally, bioinformatics and information technology services and medical/nursing services have been added. Sub-themes will be capped to avoid over-reliance.
The methodology switches to equal weighting from market capitalisation ensuring smaller innovative firms can contribute more to performance and an ESG screen is being added so only companies that comply with the UN Global Compact principles are 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.
Ginsberg explains that his ETFs were launched with HANetf in October 2018 and ITEK (Tech Megatrends ETF) is enjoying strong returns, up 14 per cent for the year to date and 60 per cent for last year. ITEK’s success is based on an equally weighted approach across eight Digital Revolution sub-themes – from Social Media, Future Car and Cybersecurity to Cloud, Robotics, Digital Entertainment and Genomics). SKYY and WELL will be able to capture more emerging trends within the ETF using a similar approach. SKYY is already up 10 per cent for 2021.
Assets have remained slim, however, with Ginsberg commenting that his ETFs were treated as brand new UCITS vehicles, as they were new to the ETF format, despite his 20 years of experience in the space as managing director of his US firm GinsGlobal Index Funds. The firm has over USD3 billion in index-linked products and mutual funds for a global audience of retail and institutional investors.
Ginsberg says: “We appeal to a more conservative client base. Everything we have ever done is targeting a client base that prefers diversification and the new equal weights allow us to include smaller and up and coming firms.”
He comments that the Nasdaq becomes very quickly concentrated in large firms while smaller, emerging trends such as cloud computing don’t see much light in terms of weighting. He also notes that the global classifications for the technology sector have changed considerably over the years, with 25 per cent of its market cap withdrawn and reallocated to other indices such as consumer discretionary or communications.
“The bottom line is that we want to capture more of the innovative plays and emerging trends and 2020 was such a year for cloud computing and healthcare.”
He comments that healthcare analytics was found wanting in the US during the pandemic, as there is no national healthcare system in the US, so no data managed in a central place.
“We also wanted to capture these new growth areas and smaller, younger and more innovative companies so in equal weight we get the diversification. It’s a risk management tool as our healthcare megatrend ETF now has 100 holdings.”
The new Biden administration is spending money supporting telemedicine, gene sequencing and medical devices – areas which were also found wanting during the pandemic, Ginsberg says, with poorer parts of the US running short of devices such as respirators.
Telemedicine – medical consultation through a digital route – is now covered by medical insurance in the US and so there has been a huge switch to using this route. There is also an increasing use of biotechnology, testing through wearable devices, has also seen growth under the new catch all rule of encouraging people not to go to the hospital.
WELL has a global reach, with Asia now bigger than Europe in the portfolio, because Asia has embraced health care analytics and cloud computing within their hospitals. The fastest growing expenditure in Asia Pacific in the health care space is now devoted to the adoption and development of such technology.
In terms of medical research, Ginsberg says: “What biotech and gene sequencing firms are doing for Covid can be taken to the next level with more precision based medicine. Both the US and Asia have focused on these areas going forward with government funding and digitalisation of health care. Parts of Asia are now more advanced even than the US.
Ginsberg has assets in total across his ETF range of USD200 million, which he is hoping to more than double with this new equally weighted approach and a more consistent, and diversified story.