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Rating:These BioTech Experts Just Entered the ETF Biz Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, December 22, 2014

These BioTech Experts Just Entered the ETF Biz

Reported by Neil Anderson, Managing Editor

A new player is offering its own take on the biotech slice of the indexing and ETF businesses.

On Wednesday New York City-based LifeSci Index Partners launched its first two ETFs, the BioShares Biotechnology Clinical Trials Fund (BBC) and the BioShares Biotechnology Products Fund (BBP). And yet they may launch more ETFs.

LifeSci is the subadvisor for the two ETFs and powers the indexes behind them, which are independently calculated and disseminated by third party Indxx, LLC. Arms of ETF Issuer Solutions serve as the investment advisor and distributor of the ETFs, BNY Mellon is the custodian, and Kilpatrick Thompson and Seward & Kissel provide counsel. The indexes are equal-weighted, not market-capitalization-weighted.

Paul Yook, co-founder of LifeSci Index Partners, tells MFWire that the shop is looking at other possible indexes (and ETFs from those possible indexes) in the space, but they have no plans to expand into unrelated sectors.

LifeSci Index Partners' sister company is LifeSci Advisors, a five-year-old firm that specializes in "providing capital markets solution for biotech companies," in the words of LifeSci Index Partners CEO Andrew McDonald. McDonald sees a bifurcation in the biotech world, between more mature biotech companies (about 35 in total) that are focused on marketing and distributed products that have already been approved and startups (about 70 in total) that are still in the clinical trials stage of their development. McDonald warns that existing biotech indexes (upon which existing biotech ETFs are based) are about 25 years old and make no distinction between the two different sides of the biotech world, sides that behave very differently from an investor's perspective.

"We thought that these two indexes were critical," Yook says.

McDonald tells MFWire that, while sophisticated institutional investors may pick and choose which biotech players to bet on, using ETFs is a better move for most retail investors and their advisors. 

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